The Decade After

After the Sept. 11 attacks, Osama bin Laden vowed to bleed "America to the point of bankruptcy, Allah willing." If that was the plan, it didn't work. The years immediately following the attacks barely showed a blip of stagnation. A year out, unemployment was a calm 5.7%. Gross domestic product rose swiftly, as did consumer spending. Stocks regained pre-crisis levels within two months. Above all, the human toll of the nearly 3,000 who perished was unspeakable. And the cost of two ensuing wars is in the trillions. But in terms of our ability to innovate, produce, and achieve, bin Laden's goal of bleeding the nation bankrupt never stood a chance.  

Still, 9/11 changed how people think, particularly about risk. Here are a few lessons I've thought about lately.

There's a history of things that never happened
Hours after Pearl Harbor was attacked in 1941, the U.S. military planted mines in San Francisco Bay. Trenches were dug along the West Coast. President Roosevelt allegedly discussed a land invasion reaching as far inland as Chicago. The thought that Japan would follow up with an even greater attack on the mainland wasn't if, but when.

A similar attitude prevailed after 9/11. Everyone from policymakers to intelligence officials to lay Americans warned that an impending second attack was nearly certain. The media even gave it a name: The Age of Terror.

Save for the anthrax episode, we've so far avoided it in America -- and thank goodness.

Looking back, there's something to be said about feelings of inevitability that never come to pass. The fact that we experienced a terrorist attack that no one expected, and then avoided one that everyone did expect, is a strong lesson in how unpredictable the future is.

Emotion trumps rationality
In the year after 9/11, air travel fell and car travel jumped. Understandably, people suddenly thought planes were more dangerous than cars.

But statistically, the opposite is true. German professor Gerd Gigerenzer estimates that the increase in automobile travel in the year after 9/11 resulted in 1,595 more traffic fatalities than would have otherwise occurred. In other words, more than half as many people died attempting to avoid another 9/11 than died in the actual attack. Add in the impact that stress had on our health, and the reaction to 9/11 may have been more deadly than the attack itself. "People jump from the frying pan into the fire," Gigerenzer said.

In his book The Science of Fear, Daniel Gardner takes it a step further. He notes that if there were a 9/11 every month for an entire year, the odds that you'd be killed by terrorists are one in 7,750. By comparison, the annual odds of dying in a traffic accident are one in 6,498.

There's an important lesson about risk in there that can apply to other sides of your life, including investing. Like those reacting to the fear of another terrorist attack, investors seeking to avoid perceived risk often put themselves in greater actual risk. In the 1980s, those who bought gold in an attempt to safeguard and preserve their assets from inflation ended up losing the vast majority of their money. While attempting to protect their wealth, untold amounts have been lost by those cashing out when markets sink, only to miss the rebound that invariably follows. Risk can be an ironic foe.

"History doesn't crawl; it leaps."
Nassim Taleb made this point in his book The Black Swan. Societies "go from fracture to fracture, with a few vibrations in between," he wrote. "Yet we like to believe in the predictable, small incremental progression." This is the basis of Taleb's black swans: The unexpected shapes our lives in ways that the expected can't fathom.  

I've spent some time digging through archives in search of a 10-year economic forecast that fared accurate in hindsight -- or was accurate for the right reasons. No luck yet. In 1980, many worried that the world would soon run out of oil. Very few predicted the looming collapse of the Soviet Union. In 1990, most thought the housing slump resigned the economy to mediocrity. Almost none predicted an impending Internet boom. In 2000, most predicted that the national debt would be paid off within a decade. None knew Lehman Brothers would go bankrupt. None knew that a group of terrorists was plotting to strike America.

Most of what was expected to shape the past 30 years never happened, and what did shape the past 30 years was never expected. That's how it's always been, and the same will be true going forward. The events that will have the greatest impact on the next 30 years simply cannot be predicted today, will hit quickly, and will come out of nowhere. Sept. 11 reinforced that point. History doesn't crawl; it leaps.

Onward
The day after the attacks, Motley Fool co-founder David Gardner penned an article titled "The Day After." "I heard many say on Tuesday, 'The world will be forever changed,'" he wrote. "No more this. No more that. I certainly hope not. But this Wednesday morning I hear even more saying: 'Let's show them the spirit of America. Business as usual. If you stop doing, acting, creating, you've done just what the terrorists would like.'"

Sept. 11 did forever change the world. It took almost 3,000 Americans. It changed how we think. It changed how we plan. But it did not, as David wrote 10 years ago, stop us from doing, acting, and creating. Pause today to remember and honor the victims of the attack -- and the enduring spirit of America.

Follow Fool contributor Morgan Housel on Twitter, where he goes by @TMFHousel. The Motley Fool has a disclosure policy.


Read/Post Comments (9) | Recommend This Article (44)

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 September 11, 2011, at 5:26 AM, reflector wrote:

    10 years later and we still don't know who was behind the 9/11 attacks.

  • Report this Comment On September 11, 2011, at 8:33 AM, TMFBane wrote:

    Great piece, Morgan, as usual. It’s really important for us to think about what this day means for America. I sometimes wonder if rather than returning to normal, we all should have shared just a bit more in the sacrifice that was necessary to wage the war on terror. For many of us, it became better business than usual after 9/11. We gave ourselves tax cuts and cheap credit and Wall Street bankers paid themselves tens (in some cases, hundreds) of millions of dollars in order to create WMDs for our financial system (hey thanks, fellas). Meanwhile, American soldiers were paying the ultimate sacrifice overseas. Perhaps one lesson from this tragedy is that economics is about tradeoffs. If you want a multi-trillion dollar war on terror, then you must be prepared to pay for it. And we shouldn’t have asked our troops to be the only ones to pay a price for keeping America safe.

  • Report this Comment On September 11, 2011, at 10:25 AM, ravenesque wrote:

    Still waiting for someone to explain to us why the 9/11 Commission lied about the data recovery of the WTC hard drives by Convar showing +$100 million in suspicious money transfers while the attacks were underway.

    Anyone?

    http://michaelfury.wordpress.com/2008/08/20/the-ghost-in-the...

  • Report this Comment On September 11, 2011, at 1:01 PM, whereaminow wrote:

    The whole affair is a mountain of lies used to justify state power and the murder of innocent people.

    David in Qatar

  • Report this Comment On September 11, 2011, at 5:28 PM, OutperformOrDie wrote:

    In my opinion, this article deserves at least 500 recs.

  • Report this Comment On September 11, 2011, at 6:26 PM, pastreet wrote:

    Great article. And many of the reasons that investing in US companies will outperform over the long term. It's not about the circumstances, it's about the people. God bless the USA.

    Pat

    www.compoundingreturns.com

  • Report this Comment On September 11, 2011, at 10:51 PM, exoracle wrote:

    Good post.

    I am a little surprised that the 10 anniversary of 9/11 could come to pass without acknowledging the origins of the MF Current Events board. It started on 9/11/2001 as a forum for the MF community to sort out what the hell was going on that day.

    I was one the many that migrated to that board that day. With all the media attention I decided to look back on some of the comments and my participation on the board as we all tried to sort it all out. I appreciate The Fool keeping all that history on-line.

    Of course, I had to put my thoughts on that day and the subsequent decade back on the Current Events board:

    http://boards.fool.com/i-think-most-know-that-this-board-quo...

  • Report this Comment On September 11, 2011, at 11:56 PM, Merton123 wrote:

    The United States is almost bankrupt fighting two wars. The Standard and Poor Credit Rating has downgraded the United States Debt. Ten Years after September 11th we still are fighting two wars with no end in sight. How long did we fight the Vietnam War? The solution to the Middle East crises is small nuclear reactors that are used to power our submarine fleet. When we stop buying Middle East Oil they will not have any money to commit terrorists acts. They will have to find real jobs like us. And investors investing in companies that manufacture small nuclear reactors will make a nice profit. Fool On

  • Report this Comment On September 16, 2011, at 9:11 PM, critter88 wrote:

    In today's fast paced world, we tend to forget too quickly and too easily. One of positives of 9/11 is reaffirming how much Americans have in common, an attribute that's not apparent as the media magnifies our differences. Our conservatives and our liberals are really shades of "moderates" when they are lined up on the world stage. I find it disheartening when our elected leaders are unable to find common ground because they believe they are faced with insurmountable differences. America has lost thousands of lives in defending our ideals since the founding of our country and we deserve better than that from our elected leaders.

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