Friday, March 21, 2008

A Pause for Reflection

It could not come at a better time…Easter that is. Investors could use a break after riding the financial rollercoaster for the past weeks. Imagine the mighty Bear Stearns gone in a week - as if Moses had returned to part the “Red Ink” and the bank was swept away with the lowering of his staff.

In Judaism, Passover commemorates the freeing of the Children of Isreal, who had been enslaved in Egypt. The Old Testament describes how God told the Isrealites to mark their doors with lambs blood so they could be spared from retribution aimed at the Egyptians as God “passed over” the territory. The Jews were instructed to remember God’s covenant with a Passover celebration as they followed Moses to freedom.

Passover figures prominently in Christian thinking also, since it was the Passover celebration that brought Jesus to Jerusalem and his final days. The events following Jesus execution inspired the Easter celebration that at the core of Christian faith.

Many might be surprised to find that the events of Passover and Easter also figure prominently in the third major “book” religion - Islam. Indeed, Moses is the most mentioned figure in the Koran. The circumstances of Moses birth, the story of his life and the exodus from Egypt make up the largest chapter of the Koran.

Islam also recognizes Jesus Christ as the Messiah and a messenger of God. The Koran’s third longest sub-chapter is dedicated to Jesus and another sub-chapter to his mother, Mary. Islam remembers Holy Thursday and Jesus last supper with the twelve disciples. Sermons at Friday prayers in Mosques around the world are often dedicated to the Prophet Jesus.

What does any of this have to do with the stock and bond markets? Well nothing directly and everything indirectly.

It is worthwhile for all investors to step back from the brink and put into perspective what it is we are trying to accomplish. At the core we are simply attempting to provide for ourselves and our families. In other words we are just trying to "have a life." Moses had a life - such a big life, it inspired religious authors to write about him at length, in long-hand no less. Perhaps if more of us kept that perspective all through the year, there would be fewer “bubbles” and fewer debacles engendered by reckless, ego-centric business strategies.

Passover this year begins April 20th. Most likely we will need another break for reflection then, too. The de-leveraging and re-mixing that brought Bear Stearns to its knees must unfold in many other shops as well. Perhaps few were as highly leveraged as Bear Stearns or as deeply entwined in complicated structured debt instruments, but certainly the mighty Bear was not alone.

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