Chicken Little, the sky is falling. Did you not notice the sky is falling? I mean, everyone knows the sky is falling. Do you not watch TV, read a newspaper, own a house, have a mortgage? Do you not know that the sky is falling is the flavor of the day?
Do not worry. Next we will have the perpetual boom. Everything will be great. Every kid will be above average; the stock market will never go down again, ever; and the price of Starbucks will go up enough that they’ll never have to close a store again.
Then the sky will fall again.
The question I like to ask is, do I mind the sky falling? Does it really affect me? Do I care? Well, yes. This sky-falling business has cost me millions. You should have seen the look on my mother-in-law’s face when I told her I lost at least $500,000 in the market since November. And of course I underestimated—it never helps to tell your mother-in-law that you lost at least $1 million or more. The question, however, that the loss presents is the better one: Is the house I bought, or the stock I bought, something I’ll be happy owning in five years?
Now understand what I mean. If I put the house, or the stock, or the art in a closet and did not look at for five years, when I brought it out again, would it represent value and would I be happy with it? In figuring out my answer, I assume that there will be no earthquake, or fire, or other natural disaster during those five years. And the fact is, if the asset does not meet the five-year test, then into the dustbin it goes.
What is good about the sky falling is this: Into the dustbin goes the junk. Everyone cleans house. The stupid investments are sold. The shaky stores are shut down, and then the mall operators are forced to find new tenants. This type of house cleaning is good. The thing is, to properly clean house, you have to have the eye of a collector and not a demolition man. Get rid of the ugly shoe art from the 1980s, the stupid Starbucks in the bad location. Get motivated, focused, and directed and get some real wealth creation going. When the sky falls is when you make the choices that will make you money when the sun is shining.
