While I have often been impressed with both President Obama's speeches and candor I honestly was not a big fan of the President's speech to Wall Street this last week. His comments, in my interpretation, amount to nothing short of bad news for all long term investors.
Obama, in his speech, said:
"Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's. So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences..."This speech was not attached to a new regulation bill, or a part of a committee’s recommendations, or even the basis of a new fact finding endeavor- they were just empty words. It has all the effect of a finger wave- a "you should know better". Let’s face facts though if you were the type of risk taker that President Obama was addressing with this speech you have had a phenomenal last quarter since the meltdown. You were, in fact, handsomely rewarded for taking risks. Scolding investors for making money while their bosses praise them for these same activities is not likely to lead to change.
This is bad news for all investors. When the financial world came crashing down many of us were hopeful that this would lead to less speculation and a return to true investing. I for one had hoped that safeguards would be put in place to prevent this from ever happening again. And yet here we are months later and still little, if anything, has fundamentally changed. The market has rebuilt itself again on the same faulty foundations. This is bad news for long term investors.
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