I received my November issue of Money Magazine today. I was curious about any reader reaction to last month’s interview with Zvi Bodie which the magazine titled “You Can’t Handle the Truth About Stocks.” The editors printed two reader letters responding to the interview. One had this to say:
I wish more people had the guts to expose the truth on investing. Fear and greed motivate investors to take risks. If people considered 4% a “normal” return, they would hardly have to take any risk at all.
Clearly this writer is a Bodie fan. I like her point about what people consider to be a “normal” return. Maybe the huge bull market in the late 1990’s was bad for our collective investing psychology. Too many of us seem to be hoping or even expecting a return to those “good old days.” I think they have a long wait.
That was the attitude of the other writer, who had this to day about Bodie’s views:
[W]ho wants to deprive himself to save 30% of his salary and work like a dog until age 75? Rolling the dice on stocks is a lot more appealing.
This “investor” certainly doesn’t believe in the principle that the pain of discipline is much less than the pain of regret. By this I mean that he is unwilling to make lifestyle sacrifices now to insure that he will have a self-supporting lifestyle when he retires. This is the same attitude that led to our current economic crisis.
What happens if he loses that “roll of the dice?” It’s not our problem. Bodie warned him, didn’t he?
By the way, which of these letters to the editor do you think was printed with a larger font? You guessed it – the Bodie skeptic received top billing. After all, so much of Money Magazine is supported by advertising from the investing industry.