- The Washington Times - Wednesday, September 26, 2001

Last week's bloodbath in the stock market was one of the worst on record. I feel especially bad about it not because of my own personal losses, but because I was actively encouraging people to buy before the stock market reopened on Sept. 17.

My thought was that the terrorists who struck the World Trade Center were not just aiming at the United States as a political entity, but at our economic core. That core is, essentially, Wall Street.

What I mean by saying this is that Wall Street our nation's financial heart is the place where the ownership of America's vast economic and industrial base changes hands every day. It is often forgotten, even by sophisticated investors, that when one buys a share of stock, it is more than just a paper transaction.

The buyer is acquiring some percentage, no matter how small, in something real a thriving enterprise consisting of plants, equipment, skilled workers and other tangible and intangible assets.

Wall Street as a whole the New York Stock Exchange, the Nasdaq and other markets in effect owns America. I don't mean this is some silly conspiratorial sense. I only mean that the stock sold on these markets represents the vast bulk of America's economic wealth. I don't know the exact figure, but the combined assets of the Standard & Poor's 500 corporations the 500 largest corporations in America represent a very considerable share of all the nation's wealth.

It is clear the terrorists were trying to strike at our economy by striking at Wall Street. They could have chosen an infinite number of targets. Why the World Trade Center?

Because, I believe, it was as close as they could get, logistically, to Wall Street. I am certain they would have crashed a plane into the New York Stock Exchange itself, were it possible for them to do so. Given the geography of Lower Manhattan and their modest flying skills, the World Trade Center was the best they could do.

They had another goal as well. And that was to enrich their misguided movement. Rumors are rampant that there was heavy short-selling of key stocks, such as those in insurance and airline companies that would suffer most, financially, from the World Trade Center attack. (Short-sellers benefit from falling stock prices.) This was stupid and greedy on the part of the terrorists, because it provides a paper trail directly to them or their accomplices that law enforcement officials are following diligently.

Given these facts, I had hoped naively, as it turns out that Americans would pull together to deny the terrorists part of their victory. Sadly, the sharp fall in the stock market last week has given the terrorists much of what they had hoped to achieve. I thought a wave of patriotic stock buying might actually cause the market to rise, rather than fall sharply as the conventional wisdom expected. I still think that if the market had risen last week, it would have been a poke in the eye to the terrorists.

Well, it didn't work out. And I apologize to those who followed my advice and bought stock last week. But I firmly believe that markets are wrong to discount America's economy so heavily. I thought that the market was a "buy" when the Dow was at 10,000. Now, it is an even better buy.

Our nation's economy, our capital stock, did not suddenly become 15 percent less valuable just because some lunatics destroyed a couple of buildings in Lower Manhattan. Those who bought stock last week will make money eventually sooner, rather than later, I think. The history of similar things, such as the attack on Pearl Harbor, is that after a wave of panic selling, markets rebound within a few months.

It is also worth keeping in mind that no one who placed a "buy" order on Sept. 17 bought at the market's previous close.

The fall in the market was instantaneous. Therefore, they bought only after the market had already fallen several hundred points.

Even though the market continued to fall, the assets those people acquired were worth more than they paid for them. They will make money if they are patient.

In the long run, if one has a well-balanced portfolio which any individual can get through various mutual funds you will make money. And more than you would get by parking your money in T-bills or some other super-safe investment.

It is always tempting to believe that one can switch back and forth and have the best of both worlds, but no one on Earth is smart enough to do that. In the end, you end up being worse off than if you had just stuck to one investment strategy and rode out the short-term ups and downs, no matter how severe.

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