Tuesday, December 18, 2007

A Bit Short

I am employed at one of the many institutions of higher education that farms out its retirement plans to TIAA-CREF. TIAA-CREF runs some of the largest investment funds in the world, including basic domestic stock, domestic bond, international stock and money market funds.

It strikes me as interesting that the only options that most employees with such plans have is to invest in the future growth of America or worldwide economic growth. We have no choice: the options of one's plan dictate that you invest in one of these funds whether you believe that growth will or should continue or not. It's a bit like all the choices we have as purchasers of automobiles - color, style, accessories, etc. - but no real choice about whether to own a car or not. Just as we must all be drivers whether we support our system of transportation or not, so most of us must be investors in America's economic growth and the drivers of that growth, our corporations.

This is a fact even we professors don't think or talk much about - we, those people who purportedly value teaching "critical thinking" (a wholly empty bromide that if ever there was one, one that succeeds mainly in promoting self-satisfaction and little thought, much less actual criticism). What if there was an option to "invest" in the market's decline and economic contraction - that is, a fund that shorts the market? Why aren't our purportedly Marxist professors who hate capitalism demanding such a fund? How about our post-modernists, our radicals who see power everywhere? How can they be content investing in even in a "Socially Conscious" stock fund when even companies in such funds are still part of the overarching structures of capitalist power in our world? Would they invest in it? Should they? Should anyone?

In recent months investments in "Bear Funds" would have been a good investment, outpacing Mr. Market modestly over the past year and significantly during the past six months (along with funds that bet on the decline of the dollar and are purchasers of gold or gold stocks). So, there have been good financial reasons over the past year and especially past six months for betting against the U.S. Market. But what about philosophic reasons? Many people view "short sellers" as un-American, as unwilling to invest in the brighter future of America. Others in the financial industry regard them as a necessary evil - people who provide liquidity and who reign in the over-exuberance that can occur during Bull Markets, kind of like the vultures of the financial industry. But what all these analyses have in common is the assumption that a well-functioning growing market/economy is an indisputably good thing, and if Bears can be justified, it's because they are good for the overall health of "the Market."

Even our most radical radicals are firmly in the bourgeoisie, investors in America's future even as they spend their daylight hours criticizing the nation. In the meantime, an interesting question might be entertained by "critical thinkers": might there be ethical grounds to "invest" in the market's decline that go beyond the support of the market itself? Could this be one of those unthinkable thoughts that can't be entertained by the Left or the Right? Could one admit in polite company during holiday parties that one has done very well betting against the market this year in the same way many people have had no compunction acknowledging that their technology funds did very well a decade ago? An interesting thought as investment fund annual reports begin to fill our mailboxes in the wake of Christmas cards...

1 comment:

Anonymous said...

something to understand about the Yankees: their principles always stop at their pocketbooks.