A Message From the Editors: When Panic Becomes Opportunity

The collapse of Lehman Brothers set into motion a chain of events that seems unbelievable, even in hindsight. Even the nationalization of Fannie and Freddie had a historical precedent -- they started out as government entities, then came to be quasi-governmental entities in the 1960s, and now have returned home.

But Lehman's fall was a turning point. What had been a housing slump, general recession, and bear market turned into the biggest financial story in at least 50 years. The Great Depression wasn't being name-dropped before Lehman's demise; now it's mentioned with great frequency.

What happened next was gruesome: Markets plunged. Once-proud companies like Wachovia were gobbled up for prices that a year ago would have seemed like a felony. AIG nearly failed, then was given government aid. Automakers like General Motors put their hands out for Uncle Sam's quarters.

Underlying all this is unprecedented U.S. government involvement in the financial markets, the likes of which our country has never seen before, and is never likely to see again.

Ordinary retail investors were left in the lurch. The plunging market made for ghastly paper losses (especially painful for retirees or near-retirees). Jobs were lost. Homes were foreclosed upon.

Opportunity 2008
The Motley Fool responded to the financial crisis by turning over our flagship website, Fool.com, to "Panic 2008." Our programming initiatives were designed to cover the news as it came out, but, more importantly, to analyze the impact for readers. Our talented design team created a banner with the impossible-to-miss "Panic 2008" heading.

There were critics of the editorial and design changes. They argued that rather than adding to the analysis, Fool.com was adding fuel to the fires of panic.

We would like to point out that what happened from mid-September to the present was indeed a panic. Furthermore, the word panic in our context was a noun and not a verb -- we were not intimating that people actually pull their hair, run in circles, and, in fact, panic.

Nonetheless, we have decided to adapt to the times. As of last night, Fool.com is no longer descriptive, describing the Panic of 2008. It is prescriptive, and so "Opportunity 2008" reflects our belief that now is a great opportunity to take advantage of prices that undervalue many stocks. It's also a great opportunity to rebalance your 401(k), reassess your risk tolerance and time horizon, and tweak (or develop!) your financial plan.

We agree with Warren Buffett, who recently wrote:

I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and then advertised: "Put your mouth where your money was." Today my money and my mouth both say equities.

We'll be following Buffett's advice, in both our premium newsletter services and on Fool.com. Care to join us?


Read/Post Comments (8) | Recommend This Article (29)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 30, 2008, at 5:42 PM, valu3buff wrote:

    Dear TMF,

    I'm glad you've come to this realization. It certainly is time to get greedy.

    valu3buff

  • Report this Comment On October 30, 2008, at 7:47 PM, Frogtree71 wrote:

    Thanks for getting rid of the depressing PANIC 2008. Makes a nicer change to open up Motley Fool.

  • Report this Comment On October 30, 2008, at 8:01 PM, Usnzth wrote:

    I agree. Always better to see green than red when talking about the stock market.

  • Report this Comment On October 31, 2008, at 7:13 AM, none0such wrote:

    Ironically, green in Asian markets signify equities are down whereas red signifies equities as being up. However, it is always a prudent time to pay attention to companies rather than stocks.

  • Report this Comment On November 01, 2008, at 10:01 PM, Profitseekr wrote:

    I am new to this whole thing and really appreciate the quality of this service. For me this whole turmoil has been chance to educate myself and it seems prime time for me to start investing. So now it's my time for opportunity!

  • Report this Comment On November 07, 2008, at 5:45 PM, BillJefferys wrote:

    The comment in the article is that "Fannie and Freddie ... started out as government entities, then came to be quasi-governmental entities in the 1960s, and now have returned home."

    While this is true for Fannie, I believe it is not true about Freddie. Freddie was in fact not chartered until 1970, two years after Fannie was rechartered as a GSE in 1968. Fannie was founded in 1938 as a government-owned enterprise; Ginnie Mae was established with part of Fannie's portfolio at the time that Fannie was rechartered as a GSE. Of course, we now know that the GSE model doesn't work, because everyone believed that Fannie's and Freddie's MBS were backed by the full faith and credit of the U.S. government. Well, they are now, but they weren't then; only Ginnie's were before the recent shakeup.

  • Report this Comment On November 08, 2008, at 3:26 PM, mantissayer wrote:

    We all have to remember each time we decide to buy anything (retail included) we are in the long run investing in ourselves. Choosing to not invest or stand by to "wait and see" only adds to the crisis. We all have to stop and think. OK, maybe we can't have the designer coffee everyday...maybe now it's three days a week-but still buy it. There are great companies out there that have lost value for no real reason other than the "panic" Put together what you can and look to these companies as a start towards recovery and opportunity. There you go OPPORTUNITY!!!! So much the happier thought-spread the good rather than the negative-let's hope other's take Fool's healthier perspective- here's to our health!!!

  • Report this Comment On November 08, 2008, at 3:56 PM, ForVanessa wrote:

    Think of it only as an opportunity to buy stock bargains. The breadth of this downturn are in no way over; and it is going to be a long downturn in my opinion. Buy for the real long term...there has been too much damage inflicted at this point. Only use funds you can afford to lose at this point in the near and medium term future. Always try to stay exposed in the markets regardless of whatever may come. Most probably, UNLIKE a casino, you won't lose everything.

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