My friend told me about the time he visited New Orleans on a business trip and decided to visit one of those Voodoo shops. The owner, a priestess of sorts, gave my buddy a magic bag–or a mojo bag–to help him with his sales presentation.
What the heck, he said, and took it along to the meeting… And his presentation was a smashing success.
Now, my friend isn’t a superstitious guy, so he decided to open up this strange bag to find what magic amulets or lucky coins had driven the success of his presentation. Inside of the mojo bag, he was a little disappointed to find a bunch of twigs and stones. All quite common.
My friend concluded the magic was never in this little purple velvet bag tied by a red ribbon; he had carried the magic inside himself.
I was just reading over Warren Buffet’s letter to Berkshire Hathaway shareholders and I think Buffet points out the major ingredient in the market’s mojo bag: confidence.
By the fourth quarter, the credit crisis, coupled with tumbling home and stock prices, had produced a
paralyzing fear that engulfed the country. A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. – and much of the world – became trapped in a vicious negative-feedback cycle.
Fear led to business contraction, and that in turn led to even greater fear.
But I’m willing to go into the root of this problem one step further. Americans are dysfunctional about wealth-creation. As a general rule, people love to create wealth for themselves and are envious when it is created for others.
Over the past few years, I have heard the constant drumbeat in the media that rich people are evil. Granted, rich people can be jerks. So can poor people. In fact, on any given day, I can be a jerk.
But, trying to shake down anyone’s money–rich or poor–because they may be jerks will never cause money to flow better.
There’s another concern. Once, investors really had no choice but to keep their money in American accounts. That’s no longer the case. We are part of a global economy and a global investment environment. Smart countries will be glad to take investments from Americans and let them compound their money without cumbersome taxes.
Change has not come to America. It’s the same old politics of greed and envy and it’s producing the same old bad mojo. Until we correct our own attitudes toward wealth creation, long-term prosperity and equality can never take root.