The Story of Rich: A Financial Fable of Wealth and Reason During Uncertain Times

Foreword

The business schools at Northwestern University and The University of Chicago have teamed up to calculate and publish a Financial Trust Index. In March 2009, just after the Index was started, only 13 percent of people surveyed had trust in the stock market. This wasn’t a surprise—it was the rock-bottom of the financial crisis. Across the country and around the world, couples were sitting down, reviewing their financial statements, and saying “well, at least we have each other.” From a financial perspective, it seemed like there would soon be nothing else left.

At the other extreme, in 1999, at the height of the dot-com Nasdaq stock market boom, the Chicago/Northwestern Index did not exist. But if it had, the survey would probably have found that at least 75 percent of the country trusted the stock market. Remember those television commercials about “money coming out of the wazoo” and tow truck drivers buying their own personal islands? Real people were quitting their jobs to become day traders. Everyone could get rich trading stocks … or so many thought.

Isn’t this interesting? The stock market crashed in early 2000, just when everyone thought getting rich was easy. And then, in March 2009, at the very bottom of the crisis, when no one thought stocks were safe, the market stopped going down, turned around, and climbed by 100 percent in two years.

In other words, if you find yourself going with the flow and agreeing with the masses, you may be making a huge mistake. In ...