VOLUME 9, NO. 1, May 2003
THIS FEATURE INCLUDES;
Polyanna Returns
By Mary Ann Greenwood
POLLYANNA RETURNS
Pollyanna has been almost pecked to death by Chicken Little – and the Bears are eating Bull meat on Wall Street. What a challenging time the 2000-2002 Bear Market has been for investors, managers and advisors.
Every Bear Market (when the equity market loses 30+ percent of its value) has its causes and characteristics. There have been four over the past century (see insert). This time, it began with the Y2K panic, followed by the technology bubble, a prolonged Presidential election, the terrorist attack of 9-11, corporate governance issues, and finally, the invasion of Iraq. Is it over? Pollyanna certainly hopes so!
In the search for what one should do in this environment, pundits are declaring, as always, “this time it is different”; investors should seek new strategies and programs. In truth, most would-be pundits don’t know. Investment has not changed: capital is placed at risk with the expectation of gain, but the possibility of loss. Having been around the block a couple of times, Pollyanna observes that Santayana was right, “Those who cannot remember history, are condemned to repeat it.”
To illustrate, a friend recently shared a copy of LIFE Magazine from January 7, 1946 – just five months after the end of WWII. The purpose was to read an article on Winston Churchill’s paintings, but another article caught my attention: WALL STREET - Bull Market Gives New Life to Citadel of U.S. Capitalism. The opening paragraph is great...-- snip --
Yet another article in that January 1946 issue of LIFE caught my attention: Americans are Losing the Victory in Europe. John Dos Passos, returning from the Nurnberg trials, reported on the difficult times in post-war Germany and Europe. His comments remind us that winning the peace may be as difficult as winning the war. I expect that we should be prepared to hear similar criticisms of the present, even though we expect the eventual outcome to be successful.
“A tour of the beaten-up cities of Europe six months after victory is a mighty sobering experience for anyone. Europeans, friend and foe alike, look you accusingly in the face and tell you how bitterly they are disappointed in you as an American. They cite the evolution of the word “liberation.” Before the Normandy landings it meant to be freed from the tyranny of the Nazis. Now it stands in the minds of the civilians for one thing, looting.
“Never has American prestige in Europe been lower. People never tire of telling you of the ignorance and rowdyism of American troops, of our misunderstanding of European conditions...
