Suze Orman Show

Why This Will Be the Best Year Yet

Suze Orman

It’s the eighth anniversary of the Suze Orman Show on CNBC. And I am ready to celebrate. I know, I know, if you compare 2002 to 2010 it might look depressing at first glance. But I think we’re in much better shape today than we were in 2002.

From a statistical standpoint it’s easy to think that we’re so much worse off today.

  • Even though we were in a recession in March 2002, unemployment was 5.5% compared to 9.7% today.
  • The median price of an existing home in March 2002 was a $183,400 a 10% increase over its March 2001 level. Today the median price is $172,900 (as of year-end 2009) having fallen 4% over the past year, and more than 20% since 2007.
  • Even after the deflation of the Internet stock bubble that began in 2000, the five-year annualized return for the S&P 500 as of March 2002 was a still strong 7.8%. The 5-year annualized return for the S&P 500 right now is 0.5%.

So why in the world do I think we’re better off today?

Because eight years ago so many of you were living a financially false life. Oh sure, everything looked great, but it was all a façade that was built on shaky money habits.

Who needed to bother with building a real emergency cash fund when you were convinced that your home was the best ATM in the world. Hey it was even better than a bank account because you could deduct the interest payments.

And who needed to stuff much into their retirement savings. You figured your home was a better investment, or at the very least you were expecting the stock market to regain its momentum from the 1990s when it posted an annualized gain of 18%.

And who needed to think about delayed retirement; between your home equity and your still-plump investment accounts you were counting the years to early retirement.


Well, now you know better. As the renowned investor John Templeton once said, “The four most dangerous words in investing are This Time Is Different.” Back in 2002 you were still convinced that it was different. That homes could appreciate at a 10%+ annual rate—and never, God forbid, lose value. You thought there was a new investing paradigm that make P/E ratios of 40% a good value. You thought none of the old rules applied to you.

And the more you believed all that the steeper the price you have paid.

What We Know in 2010

I appreciate it has been a painful time, but where we are now is much healthier than where we were in 2002. I don’t have to explain why an emergency fund is vital. I don’t have to tell you that exotic negative amortization loans are dangerous. I don’t have to explain market risk. And you sure have been schooled in how dangerous it is to live well beyond your means by tapping HELOCs and running up massive credit card balances.

You get it.

And that makes me feel so hopeful about your future. Sure, many of you may still have some digging out from past financial missteps. But the point is you are focused on doing the digging. You are committed to living a more financially honest life, and you know what is real vs. what is just a tempting bubble. No more spending more to impress others. You are focused on what works for your family. What will make you all safe and secure. And I am focused on helping you continue your transformation. Happy Anniversary to us both!