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Don't Invest Like SpongBob SquarePants



July 23, 2010 – Comments (0) | RELATED TICKERS: NUE , CAT , PKX

Every article and blog post that I have ever written can now be classified as belonging to my pre-SpongeBob phase. :)

Monet had Giverny. John had Yoko. SpongeBob is clearly my muse. :)

Don't Invest Like SpongeBob SquarePants



Maybe he never wanted to live in an undersea pineapple.

Cartoon sensation SpongeBob SquarePants is the quintessential optimist … to a fault. He has likely blocked all memory of that time he made a killing in the stock market and lived in a plush (flooded) Manhattan penthouse.

Alas, when the market went sour, SpongeBob's optimism got the better of him. He trusted the politicians who spoke of recovery, and he heeded the experts who counseled patience and adherence to time-tested strategies.

Did I mention that he ended up living in a pineapple at the bottom of the ocean?

Keep your feet on dry ground
Optimism is a glorious building block of the American spirit, and given the challenges ahead, we require positivity like never before. Like any human virtue, however, optimism can quickly become a vice when taken to extremes. When critical facts must be ignored to maintain an outlook, or dissenting perspectives vilified to protect a mindset, I consider these warning signs that irrational exuberance remains.



Don't fear the backlash
It takes a certain bravery to be the bearer of bad news when no one wants to hear it.



Choose your heroes carefully
Perhaps it's easier to ignore troubling observations about the state of the economy if one can label the messenger. One writer recently sought to cast Nucor as the Eeyore of the corporate world, referring to the endearing yet depressing character from Winnie the Pooh. The article claims: "Nucor once again introduced its own bit of worry and gloominess into the proceedings, like Eeyore."

Hogwash! It's far too easy to cast anyone with an unattractive message as a doom-and-gloomer or other such label that permits us to conveniently cast their ideas aside. The inconvenient truth, however, is that ignoring observations or ideas simply because they are unsettling is a surefire recipe for an excessive optimism that dangerously severs links with reality.



Specifically, Nucor is pressing for efforts to achieve energy independence, balance our trade deficit, rebuild American infrastructure, and restore the nation's critical industrial base. DiMicco takes his role in addressing these challenges seriously. He writes:

This is our crisis, our challenge, and our responsibility. We are being called to address and succeed at resolving this economic crisis. Make no mistake about it, we must embrace this opportunity in order to change our direction as a country for the betterment of current and future generations of Americans and, as a result, the rest of the world.

Quite the opposite of an Eeyore, I would be more inclined to liken a Nucor, its management, and its loyal "teammates" -- since they courageously confront the generational challenges faced by their nation -- to an entirely different sort of iconic character. For their persistence, realistic optimism, and unquestionable patriotism, I think Captain America would fit the bill.

So, don't be a SpongeBob SquarePants, and listen to Captain America.



As always, please be sure to link to article itself to read the entire text, and please don't forget to recommend it there if you enjoy it. And in particular with this one, send it along to your friends and family ... I think they might get a kick out of it. :)


Have a great weekend, fellow Fools!


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