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Surviving the Greatest Financial Crisis of Our Time

By Michelle Singletary
Sunday, March 8, 2009

He had me at the title.

Dave Kansas has written "The Wall Street Journal Guide to the End of Wall Street as We Know It: What You Need to Know About the Greatest Financial Crisis of Our Time -- And How to Survive It" (Collins Business).

For the Color of Money Book Club selection for March, I recommend you read Kansas's book, which at $15.99 is a bargain look at how we came to be in what I call the Millennium Meltdown.

Kansas is an experienced financial journalist who has covered the good, bad and ugly of the financial markets. He's editor-at-large for FiLife, an online personal finance Web site. He spent four years as editor of the Wall Street Journal's Money & Investing section and was once editor-in-chief of TheStreet.com.

"We're experiencing a moment when nothing and no one feels safe," Kansas summarizes in the book's introduction. "People are understandably frustrated and angry. . . . It is a time of high anxiety with moments of panic arguably not seen in this nation since the Great Depression, even if the present circumstances don't exactly mirror the calamity of that age."

Part of the reason we're fuming about our financial state is that we were hoodwinked. We were told not to worry because Wall Street wanted us to win. So, in good faith, we invested. We invested our money in retirement plans or college funds hoping not necessarily to become Rockefeller rich but to earn a decent return.

What Wall Street didn't tell us was that some executives were taking unconscionable risks to become Rockefeller rich themselves. Now many people are left weeping on the poorer side of the wall.

The rule that you should invest for the long term is hard to follow when your portfolio has tanked 30 percent (if you're lucky) to more than 50 percent in the short term. For many investors, the Dow Jones industrial average -- known simply as the Dow -- has come to mean "decimation of wealth."

So what now? Should we put our money under the mattress or still take a chance with the market?

Kansas's answer takes you on a historical journey.

"The financial crisis of 2008, like many panics before it, actually started well before it dominated the headlines," he writes. "Seeds sowed more than a decade beforehand and the steady rise of irrational confidence in complex market mechanisms eventually ended in cataclysmic fashion."

The story Kansas tells is familiar, yet it's important to read about it again.

By walking readers down memory lane, revisiting the ghosts of past stock market downturns, Kansas makes the case that what's happening now isn't an anomaly. We should have expected it. We should have planned for it.

I know some readers won't want a history lesson of previous stock market crashes. After all, we are a fast-forward nation. We want quick money and quick answers.

"What can we expect in the coming years?" Kansas asks. "First we need to know better what has happened."

We came upon this crisis because, without a historical perspective, corporations and individuals no longer feared risk. Nationwide, too many people abandoned thrift and embraced debt.

"Thrift has to make a comeback," Kansas writes. "Prudence and planning in terms of our investments, whether they be stocks or a home, will help us survive chaos. We can't live on borrowed time or thrive indefinitely on borrowed money."

So what is next?

Learn and remember. With time on your side, Kansas says don't stop investing. But make sure you understand diversification and what it truly means to invest.

"Many people became too sanguine about the stock market, treating it more like a bank than the risky place it actually is," Kansas explains in one of the question-and-answer sections that follows each chapter in the book.

If you take heed of just that one nugget of wisdom -- that the stock market is neither a bank nor a safe -- you'll get your money's worth from this book and you'll probably survive the next recession.

To become a member of the Color of Money Book Club, all you have to do is read the recommended book. I invite you to join me online to chat about the book, especially if you have questions on how to survive the greatest financial crisis of our time. Join me for a live discussion with Kansas at noon March 26 at http://www.washingtonpost.com.

In addition, every month I randomly select readers to receive a copy of the book, donated by the publisher. For a chance to win a copy of "The Wall Street Journal Guide to the End of Wall Street as We Know It," send an e-mail to colorofmoney@washpost.com. Please include your name and an address so we can send you a book if you win.

-- On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and at http://www.npr.org.

-- By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

-- By e-mail: singletarym@washpost.com.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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