Quote:
Originally Posted by irish
They are not mutually exclusive, one need look no further than the 2008 economic meltdown to see that intelligent people will do foolish & risky things with money.
Pissing away millions is stupid but intelligent people do stupid things all the time.
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The folks you speak of, the ones who got crunched by the economic meltdown, were largely the ones who speculated on the real estate market. Perhaps they were flipping houses, or buying places to rent them out, etc.
They made a couple big mistakes which, when combined, I would classify as stupid:
- They assumed real estate prices would continue to go up, even though they had already gone up way more than historical norms.
- They went into huge amounts of debt to finance it, leaving themselves on the hook for large sums of money in the event real estate prices actually came down.
You don't bet a lot to win a little. These people were taking out $400K loans on these houses and trying to sell them for an $80K profit. If you can't assess the risk inherent in that, you're a moron.
Others got hammered by economic events beyond their control. I feel sorry for those folks, but not the morons I mentioned above.