My parents didn’t fight a lot. But when they did, it was always about money. They got burned when the dot com bubble burst in 2000 and again during the financial crisis of 2008. The funny thing about financial markets is that when the bubbles burst, it never happens all at once. Even in the most turbulent of times, the movement of the overall market rarely exceeds 5% in a single trading day.
What do you remember from the fall of 2008? A lot of scary news coming from banks, insurance companies, and other financial institutions, right? September 18th was the last day of calm for financial markets. The S&P 500, the barometer of Corporate America, was still in the mid 1200s. It would take another 6 months for it to reach its trough of 683 in early March.
Stocks would go up and down, up and down and sideways. It was only possible to spot a trend after it had already happened. So when you’re in the middle of an asset pop, you can always find days when prices go up. Maybe it goes down 5% one day, up 4% another. Then you try and convince yourself that it was just a momentary correction, and prices still look reasonable and that investors will try and push the market back to where it was.
My dad was the optimist. He wanted to stick it out for two reasons. The first was that he hated selling stocks at a loss. The second was that he thought markets would bounce right back. Mom wanted to get the hell out of financial Dodge. During particularly volatile weeks, they’d momentarily forget about keeping me sheltered from the real world and have screaming matches on whether to hold or sell. Those were interesting times.
Fast forward to today and my parents are pretty happy with life. Markets are buoyant and we’ve recouped everything we lost in 2008 and then some in the subsequent years of recovery. Amazing, isn’t it? What hundreds of thousands of dollars will do to your state of mind? Turns out that money is pretty fucking important.
I’m not being sarcastic. I think there is a significant portion of people out there who treat it as something less important than what it really is. It is of critical, overriding importance. Money determines so many things. It determines who we hang out with. What we can buy. It has the ability to put a roof over our head and food in our stomach. To those who lack it, it will become a constant preoccupation.
“We Americans love pretending that our society is free of social class. And we keep that charade alive by refusing to talk about anything remotely financial. Salaries are off limits. Doubly so for net worth…”
Despite the huge importance that money plays in our lives, most people seem pretty ignorant when it comes to basic financial knowledge. Every article about 20-something finances on Thought Catalog comes with an obligatory joke about not knowing what a 401(k) is. Nobody ever mentions the Roth IRA, or Treasury bonds, or tax-free municipal bonds. These are all things that we, the people, have decided is not worth knowing unless you’re an investment banker or CFP.
I get it. Finance is not sexy. People would rather talk about other things like sports, books, traveling, the local food scene, Katie Perry’s new hairdo, whatever. Please, just don’t bore the group with your talk about tax advantaged retirement accounts. That stuff is all way off into the future, anyways.
On top of the unsexiness of the subject, it’s also fraught with taboo. We Americans love pretending that our society is free of social class. And we keep that charade alive by refusing to talk about anything remotely financial. Salaries are off limits. Doubly so for net worth. We don’t talk about how much you paid for your house (despite it being available on public record) or your credit score. Instead, we just hang out with people in our same, unofficial socioeconomic class and assume we’re all doing roughly the same.
Money is important, and yet we always fall silent on the issue. Nobody wants to admit they’re doing well. Nobody wants to admit that they’re doing badly. Nobody wants to admit that they don’t know what’s going on. So we stay silent. The tacit message? Everything’s fine. Move along, there’s nothing to see here.
It’s time to cut that shit out. There’s a whole world of finance out there, where trillions of dollars change hands on a daily basis. And if you don’t learn what’s happening in that world, you’re soon going to be at its mercy. Our generation is not going to be able to skip by, blithely unaware of the world of finance, and expect to come out in the same way that our parents and grandparents did. The stakes are higher and the rewards for “getting it” have never been so immense.
Pick up the paper. Flip to the business section. Take the time to learn about what’s happening in the real world. Money is important. Let’s stop pretending otherwise.