Pieces of Paper in a Vault

by Stefan Zajic

This comic was my first encounter with the stock market, and I still think of this strip whenever I hear ominous news from Wall Street. It doesn’t sound like much today, but back in 1971, when the strip was published, the Dow was at about 900, so a 65 point drop would’ve been roughly 7 percent, on par with the 600-point plunges in recent years.

Collections of comic strips were always around the house during my childhood. In elementary and middle school, I stuck to Calvin and Hobbes, but sometime in high school, I started pulling my dad’s Doonesbury anthologies off the bookshelf, and reading them at the breakfast table, or on the sofa after school.

Gary Trudeau’s Doonesbury started as a college newspaper strip at Yale in 1970, and the early comics are easy to understand and enjoy: Mike getting rejected by girls. B.D. getting roughed up in football games. Everybody getting stoned. They were the happy misadventures of kids trying to find their way in the world. Things got more complicated as the 1970s progressed and Trudeau got political. Reading the strips in the mid-1990s, I’d ask my dad about the things I hadn’t heard of, or didn’t understand, which were essentially all of the cultural and historical references, broad topics like Vietnam, the politicians of the time (mainly, Nixon and his cadre), the Black Panthers, psychedelic drugs, campus protests, and the AMC Gremlin.

The comic about the Dow is from June, 1971, the early days of the strip. It’s not particularly political or very complicated. Mark has come home from college for the summer, and Mark’s dad got him a job at his stock brokerage. It’s a terrible fit, of course, since Mark is a fight-the-power campus rabble rouser. But he puts on a tie and goes into the office to humor his dad and get a look at how the other half lives. The relationship between Mark and his dad is one of my favorites in Doonesbury. They couldn’t be more different and their arguments often escalate to hilarity (for example, when Mark’s dad presents him with a bill for his childhood expenses), but at times they also genuinely try to bridge the generation gap and understand each other, or at least agree to disagree.

But this strip isn’t that. On its face, it’s just a gotcha gag: “The sky’s falling! Nah, fooled ya.”

When I got my first job after grad school, in late 2006, I tried to educate myself about investing, because with that job came a 401(k). I needed to figure out what to do with it, if anything. I hadn’t thought at all about investing before, because I’d never had a real job or any extra money. After weighing the options, I decided that I would invest broadly. The recommendation for young workers over the long-term: mostly stocks, the rest bonds, and then swap gradually as you reach the retirement age. The money started coming out of my paychecks and into my 401(k), and I mostly didn’t notice.

I didn’t think much about investing again until 2008, when the markets started plummeting. I wasn’t too worried. I figured that, at worst, I’d bought too high for a couple of years, but if I kept my job and kept buying, I’d come out fine in the end. I also knew that since my investments were for retirement, they had decades to bounce back and grow.

But it was still breathtaking. My account lost roughly half its value — many thousands of dollars, in a couple of months. How could all of that money have been there one month, but gone the next? Where did it go?

People tend to think of, and talk about, having money in their retirement accounts. They talk about “pulling cash out of the 401(k)” or “making money on a good stock pick.” Our casual language for these things is really sloppy. There isn’t any money in your retirement account, of course. There are shares. But that’s a little abstract, especially in the era of electronic finances, so I prefer: pieces of paper in a vault. That’s what investments used to be, literally: stock certificates and bonds, printed on paper, often kept at the bank or in a safety deposit box. And that’s still, in essence, what your 401(k) is, or at least, that’s exactly how it behaves. It’s a stack of paper in a vault. Each month, you buy a few more pieces of paper and add them to the stack. The idea is to accumulate enough pieces of paper so that, when you’re older, you can sell them to other people and live off the proceeds during your golden years.

That’s probably beyond obvious to people who work in finance, but it doesn’t get pointed out very often, perhaps because it’s not very exciting. When the market plunges, what happens to your shares? Nothing. They’re still there, in the vault, untouched. Far away from the shouting in the trading pits and the financial news shows, in perfect steel silence, sits your stack of paper.

Of course, I understand: When the market falls, the price that those pieces of paper are selling for today drops precipitously. But unless you’re planning on selling them any time soon, it hardly matters. You’re going to sell them decades in the future, and the prices at which you’ll sell them have almost nothing to do with whatever current mania is sweeping the markets.

When you check your 401(k) balance, the bold number everyone looks at first is the value of your account. I wish, instead, that the bold number was the number of shares, the number of pieces of paper. It’s a better way of thinking about what you actually own, and it’s always headed up. I also like this way of thinking about investments because it forces you to come face to face with the strangeness of the whole venture — that you really are planning your future around these nonexistent pieces of paper.

When I was in high school, first reading that Doonesbury comic, my dad was clearly Mark and Mark’s dad was his dad, my grandfather. My dad was — probably the best word for it was, and is — anti-establishment, and that included a willful disinterest in anything financial. When he went to work a corporate job to support his family, he borrowed Mark’s approach: He put on a slightly zany tie and headed into the office, but his unconventional views (and facial hair) remained. My grandfather, meanwhile, spent the 1980s losing money he’d made working for Chrysler in the 1950s and 60s in the stock market and in southern California real estate.

Today, I’m not sure which character I’m playing. I work for a large corporation, one of the heavyweights that makes up the Dow Jones Industrial Average, in fact. I’m a little bit like Mark, laughing off plunges in the Dow and trying to keep my cool in the corporate world, and I’m a little bit like Mark’s dad, trying to play it straight. But in my version, when I play Mark’s dad, it’s my parents, not my (non-existent) kid that I’m trying to guide. I find myself talking my parents back from the ledge, (hopefully) convincing them not to liquidate their retirement savings in overreaction to daily market swings. I try to explain to them, in hastily typed emails, that when the Dow falls 600 points it might not actually be the best day to pull money out of the 401(k) to renovate the basement. It’s tough, trying to give your parents advice, financial or otherwise. It doesn’t feel quite right.

I think that’s why this comic sticks with me, and why I think of it whenever I hear about the latest market swing: The joke is simple, and not even all that funny, but the role reversal is powerful. We see the parent turned into the frightened child, and the child as the invincible adult, floating above it all — the way we all once thought of our parents, when we were kids.

Stefan Zajic lives in Philadelphia and thinks about science all day.

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