Gyroscopic Investing

I guess this is why I never really trusted financial planners.  This was probably the guy back in 2005 that told you to take out a 100% mortgage because "housing always goes up."

http://finance.yahoo.com/news/financial ... 03606.html

Anyway, I found it fascinating that he could be giving people advice and at the same time doing everything he possibly could wrong financially.

Here's the problem"

"He continues to take fairly expensive ski trips. That would seem irresponsible in his situation, and maybe they are.
But I now realize that it is not that simple. Maybe those trips are keeping the guy alive, or saving his marriage or keeping him sane enough to work."

Whiskey Tango Foxtrot

What really came across to me from that article was just how much of the 2008 crisis was from nice people acting foolishly but without any apparent cynicism let alone manevolence.

stone wrote: What really came across to me from that article was just how much of the 2008 crisis was from nice people acting foolishly but without any apparent cynicism let alone manevolence.

Well, I wouldn't go that far.  The article surely puts a nice "spin" on it, to make it seem as if they were acting in good faith, but I remember hearing stories on NPR around the 2006 timeframe where people were saying "so what if I'm taking out an interest only loan, everyone else is doing it, and it's not like the government is going to let all of us lose our houses."  This was when asked "what do you do if your house loses value?"

To me, that's blatant moral hazard, and shows a lack of regard for your fellow human beings.  Expecting others to pay your mortgage if you lose your job.  Expecting others to pay your healthcare if you get sick.  Expecting others to take all the risk while you take all the gain is typical of people buying million dollar McMansions at the time.

To me, they are not good people.  They are a corrupt and morally bankrupt people justifying their excessive consumerism by the phrase "everybody else was doing it."

Storm I agree that the consequence of what he did pretty much amounted to theft but I guess the financial crisis left me with the feeling that the world was a bad place. That article helped me see that the world is more silly than bad.

Coffee wrote: "He continues to take fairly expensive ski trips. That would seem irresponsible in his situation, and maybe they are.
But I now realize that it is not that simple. Maybe those trips are keeping the guy alive, or saving his marriage or keeping him sane enough to work."

Good quote.  Oh man, coming from a financial planner, this kind of "fuzzy thinking" is a little scary.

I want to tell him, "Remember all that rationalizing that got you in so much trouble in the first place?  Dude, you're doing it right now."

There was an amazing thing I read about how if you ask people around the world how much income would make them happy they came up with about 1.5x whatever their current income was. The range of incomes this held true for was astonishing- from multi-millions to pennies for street dwellers in Bangladesh. The tradgedy comes when people borrow to try to reach that 1.5x. Once borrowed, they still want 1.5x that and also have all the payments to deal with.