Cobb: After The Bubble

October 21, 2004

After The Bubble

I've been thinking about extraordinary phenomenon of the American Middle Class vis a vis its ability to generate billions of dollars, millions of votes, and thousands of theories.

Most of those theories today, or at least half, are centered around a number of objections to our involvement in Iraq which are sustainable only in an atmosphere of domestic tranquility. It brings to mind the parallels between this time and that of the internet stock bubble.

In those days, a pearl of wisdom I kept in my shirt pocket was this: When even your shoeshine boy is telling you which stocks to pick, it's time to get out of the market. As a fairly newly minted member of the investor class, and a devotee to thestreet.com, I was one of the fortunate ones, for a time. I had the advantage of actually working in Silicon Valley and a career in the software business. So I knew a good product when I saw one, and in those days, that was enough. I made a fortune for my broker and many of his wealthy clients by famously picking Inktomi and Akamai. I also picked a smashingly great loser in General Magic, but on the whole I made a nice pile for myself.

At the time I was working for a solid software company that was not benefitting from the high falutin' language and hype. We actually made products that the Fortune 500 purchased, although not in multi-million dollar orders. There were several clues that we were in a period of irrational exuberance, among which was an unusual encounter I had with a cat named Bernstein who was in the investment biz. It turns out that he has a rather reputable firm named after him. We were on a small plane heading to Vail and he was deep inside of a thick history book. Everything about him spoke 'long view'. I mentioned that our company was traded on the NASDAQ. A shadow of disappointment crossed his face. Simply stated, there's business and then there's real business. Mr. Bernstein goosed me along the road to understanding why the NYSE is called the Big Board.

One of the most annoying things about working in Silicon Valley, indeed in the software industry, is that if you are a conservative as I am, you tire quickly of working for people who are only 4 or 5 years your senior. One of the most seasoned managers I ever worked for was probably 15 years older. Everyone seemed short-sighted; everyone seemed hell-bent on reinventing the wheel, but this time in java, or this time 'on-demand', or this time via 'n-tier architecture'. The software industry was like a pop music chart.

Today, people who continue to parse the daily pronouncements of the candidates appear to me to be the political equivalents of day traders. A motley bunch of foolish prognosticators if there ever was one. I would like to have the historical perspective of Mr. Bernstein these days. Indeed I am really not spending much time looking at the races. But it is not only this daily minutia that annoys, it is the blindness that attention implies, and I think that too many Americans are being blind to what our new reality will be, just as many day traders were blind to the inevitability of a bursting bubble.

Just like day traders, people who have decided to be bullish on Kerry have, like day traders, micromanaged every little small bit of bad news that comes through their televisions and sold the President short. It is a risk, as I said, that can be maintained only in these days of relative calm. One of these days, some terrorist is going to drop a bomb on this nice dream. On that day, the bubble will be burst.

I believe that like day traders, those who are now making so much political noise will leave the market as quickly as they came in. A quarter of the blogosphere will go dark, and the daily volume of piecemeal kibbitzing will die down. I wish there were some other way to accomplish that, but I don't believe there is. Whether it is Kerry or Bush in the White House on that fateful day, the yammering will cease, and the long term thinkers will once again have a say.

The death of Paul Nitze the other day reminds us of how difficult it is to actually accomplish great things in geopolitical terms, and what level of complexity the big boys play. While we amateurs in the blogosphere have our turn in the spotlight, our run on the political NASDAQ, surely our betters watch in astonishment at our irrational exuberence. The very idea that the blogosphere will replace CBS sounds exactly like those Silicon Valley predictions that Brick & Mortar was a thing of the past. And when every blogger is a political pundit, like every programmer was a stock picker, it's time to get out of the overheated market.

So I hope I don't disappoint too many folks as I shift focus in the blog to other matters than the daily political spin, but I've had enough of it, and I don't think it's helping anyone to parse this stuff too closely. Especially since:

Nobody is thinking about a solution to our southern immigration problem.
The War on Global Narcoterrorism has taken a back seat.
There is money to be made in China (for me).

I think it was finally the sexuality of Cheney's daughter and the lack of flu vaccine that convinced me that there is too much hot air in these balloons.

Posted by mbowen at October 21, 2004 10:39 AM

Trackback Pings

TrackBack URL for this entry:
http://www.visioncircle.org/mt/mt-tb.cgi/2702

Comments

An awesome piece, Cobb. Excellent analogy. People (on both sides) need to chill a quick minute. In the fine-toothed-comb world of daily parsing dang near every little thing seems like a major crisis or boon.

But who are the Warren Buffets of the political trade anyway? Hard to tell.

I'm hardly a daily parser (hell, I'm not even a daily blogger), but I hope you'll excuse me if I make the odd comment about some of these hot air jetstreams from time to time ;-)

Only a few daze left.

Posted by: memer at October 22, 2004 06:20 AM

If you want to quit posting on politics, that's fine by me. This blog is supposed to be about what you want to write about anyway, right? You write about enough other interesting stuff that I won't miss the politics.

Posted by: Kevin at October 22, 2004 09:56 AM

# Nobody is thinking about a solution to our southern immigration problem.
# The War on Global Narcoterrorism has taken a back seat.

People need to realize how closely tied these two items are to terrorism.

Posted by: DarkStar at October 22, 2004 12:00 PM

Check out The Fourth Great Awakening & The Future of Egalitarianism (2000) by Robert William Fogel, economic historian and 1993 Nobel Laureate in economics. It's about American history from colonial days through the present. The book flap says "Fogel contends that the ethical and political crises that currently beset the nation are the most recent manifestations of the recurring effort to bring human institutions into balance with the massive technological changes that drastically transform the economy and periodically destabilize the prevailing culture."

He argues that there have been four great overlapping "waves" of religious revivalism, each having effects that ripple out for roughly a century, each going through three different phases. Start dates for the four waves: 1730, 1800, 1890, 1960.

Posted by: Bill Ben zon at October 23, 2004 04:22 AM

personally, I've had it up to HERE with security moms who are all a twitter cause they can't get flu shots for their kids.

Like they got flu shots for their kids last year, or the year before? Now it is a "gotta have" because it is scarce.

(One illustrious example of my acquaintance refused to vaccinate for mmr because of the autism scare. Her BOY she refused to vaccinate! Boys who become eunuchs if they have mumps in the post-pubescent years!--but now getting the flu shot is an emergency!!--the security moms, they speak in that manner, with lots of exclamation marks.)

Feh. The southern immigration influx may bury us financially, but it is the tanking education system that makes me worry.

The other sense I have about the Great Bubble of the 1990s is that it fed, bloated, incipiient narcissism and the want-->need-->must have cycle. It is weird, how deprived many very wealthy folks I know feel (including me). It is like the sense of proportion isn't just out of whack, it has VAPORIZED.

Thanks to Bill Ben Zon for the book link.

Posted by: Liz Ditz at October 25, 2004 01:00 PM

Quite apropos, I found this at http://hispanicpundit.com/

How did your representatives in Congress score? See -
http://www.lerner.udel.edu/econ-e/

The size of the pie matters big time.

Posted by: True_Liberal at October 28, 2004 04:59 AM