Public participation in the stock market soared in the 1990s. More important, investors were forgoing their brokers and playing the market via Internet and on-line brokerage accounts.
Thus the self- directed revolution had begun. Along with this revolution, which turned Wall Street's steadfast truism upside down, came a sense that there was a party that would go on forever.
Also during this period it seemed like everyone lost their common sense and most of us committed several of the seven deadly sins; some committed all of them.
As the money piled up so did pride, a lack of humility that made us all believe we were geniuses. I once sought a meeting with a Wall Street legend and put him on my service for free. He mentioned to me a few weeks later that I needed more New York Stock Exchange ideas, and I thought he was stupid.
At the rate the market was going, the NASDAQ Composite would be trading higher than the NYSE within months. By the time I realized he was right, the tables had turned and I couldn't get 98 percent of my clients to bite the bullet on any NASDAQ stock or even consider NYSE stocks.
"Greed is good" is the famous line uttered by Gordon Gekko (played by Michael Douglas) in the movie Wall Street. This became the mantra for everyone in the market. With stocks climbing through the roof, visions of unlimited wealth danced in the heads of the most ordinary of folks, many of whom had never dared or cared about being rich or super rich. Of course all the villains from that era—the former heads of Adelphia, Enron, and Health South, to name a few—were already very wealthy people when they decided they needed more.
On Wall Street it was all about envy, ogling the stuff the other guy had and doing what it took to get that stuff or better. Admiration, once a quality of gentlemen and gentlewomen working on Wall Street, was swept away by the battle for the biggest toys. The green-eyed monster was alive and well, and not just on Wall Street. I'm sure the person at your office who came to work in the latest sports car and credited his stock-picking prowess didn't have a lot of real friends, but always made the water cooler talk mean-spirited and spicy.
4. Wrath or anger
Although it was a freewheeling time, one that brought back memories of the Roaring Twenties or Sodom and Gomorrah, there was an undercurrent of anger and meanness. In the business world the cutthroat leaders and ruthless CEOs (think Chainsaw Al Dunlap) became the most admired folks.
If Jimmy Carter didn't have a problem with lust in his heart, Wall Street would have been the place to be in the 1990s. It wasn't so much a sexual thing as much as it was a lack of self-control. To be honest, a lot of folks pushed the pleasure envelope as far as they could, thinking that like the stock market, any adverse aftermath could be repaired as fast as a hot NASDAQ stock rebounded from a rare poor session.
"Get in my belly" was the call of a character in Austin Powers: Gold Member. For many investors it was only the beginning, as the appetite for so many folks knew no boundaries.
From a religious point of view, this is known as responding slowly to God. From an investing standpoint, it was being slow to respond to the realities of the stock market and its rapid demise. Certainly, once the bloom was off the rose, one could say it was divine intervention. Yet not enough investors saw the writing or got the message.
In fact, nothing drove my desire to write this article more than the fact that so many investors are in the market or coming back to the market with the same exact habits and approach that sank them the last time around.