“Most debt and credit books on the market today talk about how to cure debt by curbing your spending and ‘cutting out fat’.  They make you think that it is something you did that created the wild debt problem.” (pg. 218)

That’s an interesting perspective.  Never-mind your wild spending habits, because the credit card companies are out to get you.  It’s not your fault at all.  Granted there are people out there who have had some kind of trouble with a job loss or medical problems where their credit soars, but that’s not the majority and people are ultimately responsible for what happens to themselves.  You are the gate keeper to your life and your money.  It is absolutely misleading for Trudeau to say imply that you are not responsible for your debt and all the other books are wrong.

It’s not that I don’t think credit companies haven’t done shady things, but only you can protect your money.  Debt cures should be about learning to manage your assets.  Not everybody is in serious debt (mortgages and cars excepted), so they must have learned to control their spending and consciously chose what they want to buy.  Trudeau also refers to the movie Maxed Out numerous times.  While the movie is rather good, I think he abuses the stories in the film to make his case.

I will write more on the book once I have completed it.  It’s not a total piece of trash, but I certainly wouldn’t recommend it.

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Blumenthal relates her experience with Beanie Babies to several bubbles and a little about how the hype builds.  A lot of things are like that.  One thing that comes to mind for me are sports cards.  I remember collecting baseball and hockey cards thinking that someday my collection would be worth a lot of money.  Unfortunately, cards don’t hold their value very well, speaking generally.  Rookie cards tend to be the prized possession, but those aren’t even a guarantee.  In 1991/2 I purchased an Ed Belfour* rookie card for $8.00.  Apparently If I’d waited almost 20 years, I could get the card for $1.25** at Check Out My Cards.  I can now pay for .5 nano-seconds of my kids college education.  Even if I could sell the card for $8.00 today, I’d still technically be losing money because inflation.***   That’s not the only card that hasn’t turned out to be the gold mine I expected (I’ll touch on some of my other sports card investment fantasies in a future post).  Granted, there are cards that hold their value and are worth the money, but they are rare and generally are at least 40 years old (They tend to have names like Mantle on them).

It all goes back to the quote above that short-term investors are the only ones to make the money.  There’s no way to predict when a bubble will burst.  Even when an expert nails it, it’s still just a guess, educated and informed as it may be and s/he may be wrong the next time around.  I’m not saying you need to avoid the bubble entirely, just know that you need to get in and get out quick.  My problem was I bought the hockey card at it’s peak.  I don’t think the price went up much past $8.00.  That’s why you need to know what you’re in for, because you may be left holding the bag (you’re lucky if that’s all you’re holding).  That being said there may be instances that holding on may be worth it for the extreme long hual, but you still want to get in low.  Once the real hype has already begun, it’s probably too late.  You need to be able to hold on longer than the crash.  Beanie Babies may be valuable again someday, along with my hockey card, but that may not be for another 100 years.  Then there’s always inflation.

The key to not falling victim is to avoid the emotional rush.  It’s not unlike the emotions that gamblers feel in the casino when they think they might just hit the big one.  Honestly, I find it hard to feel completely sorry for people who lost in the housing bubble or a Madoff scheme.  So many went in thinking they would make a killing and they should have known the risks (Those who returned money after making a killing with Madoff honestly deserve the Medal of Freedom).  On top of that, they should have been aware that things were too good to be true.  It’s that rush or emotional signal saying “you’re gonna make a killing” that hijacks the sensible center.  BUYER BEWARE is the single greatest advice for anything.  But I digress.  I’ll close with another Blumenthal quote “If your investing horizon is too short to take the chance, you should avoid taking the risk.”

*At the time Belfour was a standout rookie goaltender for the Chicago Blackhawks.  Many thought he would be the Wayne Gretzky of goal-tending.

**That’s 50% of the regular price even.  The worst is I ended up with the very same card a week or two later in a pack.

***Today I’d have to sell the card for $12.65 to make a profit.

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