Keeping The Faith
Five years ago, we all believed we'd soon be rich. Let's hope we're wiser today.
By David Futrelle

(MONEY Magazine) – The day after the Nasdaq hit what turned out to be its all-time high of 5048 on March 10, 2000, a fan of then hot fiber-optics stock JDS Uniphase explained the main tenet of his high-tech faith. Messaging the flock gathered on a Yahoo Finance chat board, he wrote, "This stock will continue [its] uptrend for at least another 5-7 YEARS simply because most people believe it will."

Believe and make it so is a seductive notion, and it predates the bubble. Pragmatist philosopher William James famously praised the "will to believe" back in 1896; fans of The X-Files may recall the poster in Mulder's office featuring a blurry UFO hovering over the words "I want to believe." Of course, James was talking about God, Mulder about intelligent life elsewhere in the universe. It's hard to imagine either pledging his faith to a suddenly famous tech outfit headed by a man in a beret and selling for 300 times projected earnings.

Looking back five years, it's easy enough to find folly in the heady days of early 2000. JDSU now sells for $2 a share, down 98%. But as anyone who sat on the sidelines during the post-crash recovery in stocks can sadly attest, too much skepticism can hurt as much as too much faith. As James pointed out, those who veto faith are gambling as much as those who embrace a particular set of beliefs; they are simply convinced that the risk of being wrong outweighs the possible benefits of being right. "What proof is there that dupery through hope is so much worse than dupery through fear?" James asked.

Since the future is unknowable, all investing involves a leap of faith. But there's a difference between believing in the future of America's economy and believing in whichever stock rocketed the fastest last week. Getting excited about JDSU then, or Google now, isn't faith. It's fashion. Faith is sticking with stocks, and the market itself, when things look bleak--and believing that eventually others will come around to your way of thinking.