“Wall Street’s pitch to the entrepreneur for the last fifty years has been: you go build your business and operate it and make it valuable. Once you’ve done that, sell it, liquidate it, and turn the cash over to us; we will diversify your wealth, spread it around, extend it, because we know how to do that really well and you don’t. Your money is not only safe with us, it’s safer with us than it would be if you stayed in the game running a business somewhere out there in the middle of America.”
And the Great Recession has put the lie to that pitch, my friend said. From here on out, I’m re-constructing more than paraphrasing:
"Those who bought the Wall Street pitch have lost forty to sixty percent of their net worth. And so it will become clear once again that the way to gain wealth, keep it and expand it is to do it the way the robber barons of the 19th Century did it — by owning and controlling operating businesses. It’s fine to hire others to come in and manage them, but if you want to keep your wealth, you have to own businesses that turn on the lights (real or virtual) every day. Diversification doesn’t mean stocks and bonds, it means owning and operating several or many different businesses. This is also the best hedge against inflation, because you will always be paid in the current currency; and you won’t be having Wall Street taking its cut, coming and going, up years and down."
The rules change when it all falls down.