What You Should Do With What You Feel
Michael Lewis, Sept 17th

What You Should Do With What You Feel: Michael Lewis (Update2)

     (Commentary. Michael Lewis, author of ``Next,'' ``The New New
Thing'' and ``Liar's Poker, is a columnist for Bloomberg News. The
opinions expressed are his own. Adds the Web site of the charity
mentioned in the final paragraph.)

     New York, Sept. 17 (Bloomberg) -- As the dust settles on
lower Manhattan you can see, looming on the skyline, a pair of
clashing commercial sentiments.
     One is exemplified by Chubb Corp., which initially indicated
it might seize on the exemption in its insurance policies for
``acts of war'' to avoid having to cover the losses. (It later
said the exclusion doesn't apply and it was paying claims.)
     The other is exemplified by William J. Nutt, chief executive
of Affiliated Managers Group Inc., who, when asked about his
intentions to buy U.S. stocks for his personal account when
markets open, said, ``I think it is simply the right thing to do,
and so whether I make money or lose money, I don't care.'' It's
the choice between protecting and extending one's private
interests, or ignoring them for the sake of one's country.
     I know exactly how I feel about both attitudes, and I'll bet
you do too. I want to short the stock of Chubb and wire my life
savings to William J. Nutt. But I'm not so sure that these
feelings of mine are terribly useful.

                        Misguided Gestures

     In the current climate there are likely to be all sorts of
useless, even destructive, acts done in the name of patriotism.
Buying stocks that you suspect will lose money is one of them.
     The sad truth is that in a popular war -- and especially in a
war as nebulous as this one -- there aren't enough heroic roles
for the people who want to play them. There isn't enough to do.
Candlelight vigils and moments of silence and cash donations all
help, but they don't slake the deep desire for action and personal
sacrifice.
     So people naturally respond by doing things that are, at
best, unnecessary, and, at worst, actually damaging to the
interests of the country. Pretty much every Hollywood executive
with a terrorist film in the works declared last week that he
intended to cancel it. What's the point of that?
     One of the film makers, when asked what purpose was served by
his throwing away an $80 million investment, explained that once
terrorism is real, it is no longer entertaining. But of course
that's the opposite of the truth: Terrorism has long been
``real.'' That's why simulations of terrorism thrill us. The
change of the Hollywood heart isn't rational; it's borne of a
desire to be part of the fight against terrorism. To do something.

                      Ritual Sacrifices

     Many Americans feel some impulse to make some sort of ritual
sacrifice and, in and of itself, that is a beautiful thing. The
only redeeming feature of last week's tragedy was the sight of so
many people who were not immediately affected by it -- Americans
and foreigners -- insisting on making it their tragedy.
     The danger is that the people who insist on doing something
do more harm than good. It may not matter much if a few Arnold
Schwarzenegger films fail to make it into theaters, though it
seems a pointless waste that they won't. But the general tendency
in the wake of tragedy toward self-denial could make American life
worse and not better.
     The first victim of the misplaced patriotic impulse will be
the economy. In explaining his new economic pessimism, Kurt
Barnard, the publisher of Barnard's Retail Trend Report, told the
Wall Street Journal, ``Can you imagine people going out and buying
a DVD when tragedies are occurring everywhere?''
     ``Guilt over purchasing frivolous items,'' as the Journal put
it, is first cousin to guilt over making Arnold Schwarzenegger
films. It serves no useful purpose.

                        Go Ahead, Be Absurd

     The fact is, most of what people in a free society do minute-
by-minute, when juxtaposed with tragedy, seems trivial and even
ridiculous. Some of the turmoil in the American mind right now is
the result of a fleeting awareness of the absurdity of our
ordinary hopes and desires.
     But the American economy is premised on those absurd hopes
and desires, and won't prosper without them. I can think of no
better time than right now to go ahead and be absurd.
     The capital markets present a special case because many of
the people in them have been directly affected, and because the
prices they set are so important. There will be a powerful urge to
follow the noble lead of William J. Nutt. But the national
interest isn't to artificially prop up the stock market for a
month or two with patriotic sentiment. The national interest is to
get, as soon as possible, market prices on U.S. stocks and bonds -
- that is, prices that reflect the new reality, and that are,
therefore, reliable signals to the rest of the economy.
     When the financial markets open today it will not be business
as usual. The desires that govern them in normal times -- fear and
greed -- will be joined by another feeling: that one should do
something.
     Probably the best thing you can do if you trade stocks and
bonds for a living is to ignore this feeling and direct it
someplace else. Make as much money as you can, or avoid losing it.
If at the end of the day you feel guilty that you haven't
incorporated your love of country into your trading decisions,
give the money you have saved as a result to the New York Police &
Fire Widows & Children's Benefit Fund.

--Michael Lewis in Berkeley, California, through the New York
newsroom (212) 318-2300 or at mlewis1@bloomberg.net/br