OK – so the U.S. got downgraded by S&P (AA+) for the first time in its history. Whatever. It’s all just a game anyway.
Most talking heads throughout the weekend will say Monday will be a bloodbath on Wall Street and that many investors will be clamoring to yank out their cash.
But I must remind anyone who has money in the market (me!), out of the market and all those on the fence that “nobody knows anything.”
This phrase, coined by William Goldman in “Adventures In The Screen Trade” (worth a read even for non-screenwriters), is absolutely true in almost all industries and in almost all cases where someone is trying to predict the future.
In the movie business, the phrase was basically referring to the major studios’ inability to know what movies would work at the box office and what movies would fail. As it turns out, with all the historical data at our fingertips… nobody knows anything.
And the same goes for Wall Street:
Meredith Whitney, hotsy-totsy Queen of the Double-Dip, has no clue where the markets are going (though she seems to be praying for a downturn – probably more out of concern for her reputation than for the country).
That whack job Ray Dalio – founder of Bridgewater Associates (subject of a brilliant piece by John Cassidy in the New Yorker) – has no clue where the markets are going (though, to be fair, the whack job has been more successful than most in guessing lately).
The government, your parents, your children, Warren Buffett, CNBC, Fox News, Bloomberg, TechCrunch, your friends on social networks – nobody knows anything.
If they did, then Wednesday night I would have received a text or seen a tweet or a Facebook status update that said “The Dow will fall 512 points tomorrow – you may want to make a couple of portfolio moves.”
I didn’t get that message from any of those people who “know so much”. Just like I won’t get any correct message this weekend about what will happen on Monday. Because nobody knows anything about what will happen on Monday!
So this weekend, as we all think about our personal finances, don’t make knee-jerk decisions based on something someone says on television or an internet blog.
This may sound overly simplistic, but just go with your gut and calm the freak down. There are a lot great healthy American companies out there and they deserve your confidence.
But, then again, I don’t know anything either – and I certainly don’t know how “Rise of the Planet of the Apes” is going to perform this weekend – perhaps $35 million, perhaps $65 million. It’s a crap shoot.
Jill Kennedy – OnMedea