Ben Stein How Not to Ruin Your Life

“This time, it’s different.” These are four of the most dangerous words in personal finance. They’re dangerous because "this time" is almost never different. This was explained to me by one of the smartest people in finance, Jim Rogers, many years ago.

The problem is that this time, during this particular financial crisis, it looks as if it really is different -- at least, it does to me. I don’t mean that investment decisions should have new criteria or that corporate valuations should have a new basis or that we should abandon capitalism. By “it’s different this time,” I mean that, in this recession, the suffering among individuals and families close to me is incomparably worse than I have ever seen it before.

Please note the painful fact that I am not young. I am 64 years old. I have, as an adult in the labor force, seen the harrowing stagflation of the mid-1970s, the staggering squeeze of the early 1980s, the short but nasty correction of 1992, and the tech and S&P collapse of the first years of this century. In all of these, I saw pain. In the stagflation in particular, and in the total housing collapse of the early 1990s here in Southern California, I saw real suffering and felt real fear.

But there was always a feeling that we would soon be through with it (even if this wasn't true), and, besides, my friends and I were much younger then. We had resilience, energy, and flexibility on our side.

A Mortal Blow

This time it does feel different. The stock market crash and housing collapse felt almost all across the nation have dealt a mortal blow to many families’ hopes. As I survey my friends and relatives, I see real hardship, real insecurity. People who might have counted on a decent retirement are now totally bereft, utterly unable to find a path to security. Their portfolios are in ruins. Their homes, which they counted on selling or refinancing to support their old age, are underwater.

More to the point, the labor market is in tatters. One of my best friends is a recent law grad from a top school. Like most of his classmates, he cannot get a job. One of my primary mentors, a man whose intercession for me in Hollywood changed my life, is steps away from desperation. As I review the people I knew when I first moved to Hollywood, a few have become wildly successful. But roughly the same percentage is either indigent or close to indigence.

Why? Why is it so different this time (or why does it feel that way)? There are a few reasons. One reason is that this recession hit asset valuations extremely hard -- maybe even uniquely hard. For people in a certain age range, their assets are most of what they have. If their assets are gone and they have no strength or ability to find work, they are in serious trouble. I suspect that it was very much the same for people in their sixties in the stagflation and mauling of the S&P during the Nixon- Ford-Carter years, but I was not in that age group then. For my peers and me, things really do feel different.

The second reason is that this recession has hit not only industrial workers -- the usual victims of a slowdown -- but also white collar workers. The huge part of the population that works in retail sales has been clobbered. Those in finance and real estate are seriously affected as well. It is extremely difficult, outside of health care and the justice system, to find a robust sector.

Running Out of Time

The third reason this recession has hit so hard is that, now that the baby boomers are running out of time to accumulate money, there is no sure way they can do so. The stock market, despite a remarkable recovery since March, still sends shivers down the national spine. Real estate, which could possibly recover someday, has become a curse word. Federally insured cash is safe -- but it makes no money. If inflation strikes, as it might, then cash will be a loser.

I do not have a magic bullet for this situation. The sad fact is that the grasshoppers are in big trouble. The ants are doing all right, but this is a nation of grasshoppers. For people in Gen X or Gen Y, there is a lesson here: Small is beautiful and less is more. The old-fashioned virtues of saving and prudence still hold true. The show-offs will pay for their showing off.

Perhaps.

Or maybe Jim Rogers is right -- maybe this time it’s not so different.

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And now, on a different note, to discuss a topic that's very hot these days: Now that GM has gone into bankruptcy, stories are popping up everywhere about how they have to fix their poor shoddy cars, poor design, and poor attitude towards customers.

I do not quite see it that way.

The best-looking cars I ever saw as a child were all GM cars: the magnificent, dreamy Cadillacs of the 1950's, reeking of power and success. The sexiest cars ever made were the 1962 Corvettes -- I had one, and I can tell you it worked as a love magnet. It was red and caught rubber shifting from 3rd to 4th at 100 miles per hour. It was the hippest thing I ever owned. I was and still am stunned by the super sleek and glorious 1957 and 1958 Chevrolets, cars that were inexpensive but worthy of a king. Tail fins, lots of lights, lots of power, but priced for the working man or woman.

The best car I have ever owned was and is a GM car, the 2007 Cadillac STS-V, a magic carpet ride of power and performance.

The best service after sale I have ever received has been from GM dealers, especially my beloved Jessup Auto Plaza in Rancho Mirage, California. And now, I hope that Mr. Obama can allow GM to keep making its great cars, keep its attentive dealers, and keep treating us customers right.

My wife's Lexus sits in our garage next to my Caddy. My son's Audi and daughter-in-law's Nissan Altima are nearby. They can have them. I'll stick with GM as long as they keep making cars that not only take me from point A to point B but make me feel as if I were a maharajah while I'm going there. I'm betting on GM to last another hundred years.