In the 1987 movie Wall Street Michael Douglas's character, Gordon Gecko, grabs the microphone at a shareholders' meeting of a struggling fictional company called Teldar Paper and delivers a call to arms that is to modern bankers what Shakespeare's scripts were to actors in the early 1600s.
"Greed, for lack of a better word, is good," Gecko tells a hall of gnarled businessmen. "Greed works, clarifies, cuts through and captures the essence of the evolutionary spirit. Greed in all its forms - greed for life, money, love, knowledge - has marked the upward surge of mankind. "
With that speech, Gordon Gecko became the emblem of "raw capitalism" - unfettered free-market fundamentalism - which is now being blamed for a stock market that lost 40% in both the US and SA in 2008.
In October 2008, Australian prime minister Kevin Rudd gave a speech in which he said we are still cleaning up the mess of the 21st century children of Gordon Gecko.
"Much of the root cause of the sub prime crisis came down to our financial markets rewarding people for taking extravagant risks. Executives earned huge bonuses. But their rewards were skewed to short-term success rather than to long-term creation of asset value," said Rudd.
If that was "raw capitalism", it got smacked down hard in 2008. Even the likes of Henry Paulson, the guy in charge of the US treasury, now says "raw capitalism" is dead. With the entire premise on which markets were founded under machine-gun fire, it was no surprise that markets around the globe tanked, as the US banking-system collapse thrust banks around the world into a vice.
Though SA banks haven't lost a beat (unlike foreign banks, who just can't borrow from each other, SA banks are merrily doing so ), the JSE was also drilled into the floor.
Many thought Russell Loubser, the CEO of the JSE, was exaggerating when he said in September: "I've never seen a more grave situation, and I'm not over dramatising."
Now the JSE has seen crashes before: in 1969, it shed 35% in a year, and in 1987, it fell 11,8% on one day.
But since April, when the JSE's all share index hit 33 310, it has lost a staggering 40% - worse even than in the dark days of 1969. Loubser says the scale and the speed of the crash were unlike anything seen before: "One day Lehman Brothers was there, the next it was not," he says.
So you might wonder, should we pack up our investments and move to Oranje in the Northern Cape, eschewing capital, democracy and bodily hygiene in favour of vetkoek and women with fantastic moustaches? Well, no. But mainly because the alternatives are slim. No less a man than the father of economics, John Maynard Keynes, at one stage said capitalism was " not a success".
He said: "It is not intelligent, it is not beautiful, it is not just, it is not virtuous and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed."
As depressing as it seems, investing in the market is still the best way to save cash for retirement. Over a 40-year period, investing in the JSE has delivered returns of 20%/year, compared with the 8,6% returns you'd get by keeping money in cash. Bonds returned 10,7%.
Over 10 years, shares are still giving returns of 21,9%/ year, while returns from cash are down to 5,3% and bonds 10,8%.
In the past five years, property has delivered the sort of returns that have placed fancy Ferraris within reach of even the most innumerate estate agent (see page 36).
But the biggest bargains can be found on the JSE - where the price of shares is ludicrously low.
Normally, you assess whether a company is good value by looking at the ratio between the price of its shares on the JSE and the profit (or earnings) it makes for each share during its past financial year. The lower this price:earnings ratio (p:e) is, the better value the shares are.
Two years ago, the p:e of the top shares on the JSE was around 18, which meant it would take that many years for investors to be repaid in profits. In April 2008, this ratio was nearly 17. But the market has haemorrhaged since. By October, the p:e was below 9, by November, it was 10.
In layman's terms, this is the market equivalent of the "buy one, get one free" fire sale. Old Mutual shares, for example, have fallen 73% from R26,73 each in February 2007, to R7,20 in October 2008. At that stage, it was on a p:e of 2 - which means if you bought it today, by next year your share would be making that in profit.
Other shares were just as ridiculous. By November, Grindrod was trading on a p:e of 3, as investors saw how the Baltic shipping index hit its lowest level since 1999. Two years ago, you'd have had to trawl through the rats at the bottom of the barrel to find any stock on the JSE trading on a p:e of less than 10. Now that list includes blue chips like Highveld Steel (a p:e of 3), Impala Platinum (5,3), Nedbank (5,7), ArcelorMittal Steel SA (6), Anglo American (6,3), Standard Bank (6,7), and Sasol (7).
The reason these shares tanked was that investors were worried these companies would take such a smack from the recession they wouldn't be able to repeat their earlier profits.
But often, this was more fear than fact. In Grindrod's case, the theory was that as the recession hit, shipping companies wouldn't have as much business shipping metals across the world. But Grindrod has tied up long-term shipping contracts that would guarantee its tills kept ringing.
Getting a true picture of profit is a difficult thing, especially as globally, things still look dire: if no-one's buying your goods, your profits will fall.
The International Monetary Fund predicts that 2008 will be the first time since World War 2 that "advanced economies" haven't grown.
But are the likes of Standard Bank, Absa, Nedbank and FirstRand set for a huge fall in profits? Not likely: not only do they get 95% of their funding from each other rather than from stricken overseas banks, the mind-boggling fees they sap from consumers in "bank charges" provide them with a steady income.
And capitalism isn't dead, as some want to think. France's President Nicolas Sarkozy says the crisis isn't one of capitalism; but there has been a betrayal of the true values of capitalism, where work should lead to rewards.
In a piece entitled "The rise of Disaster Socialism", Reason magazine argued that capitalism, and the free market "aren't going anywhere".
"Trust no-one who declares an end to a system as complex and successful as capitalism, or who sees the current crisis as the long-awaited fulfilment of Marx's voodoo economics," it says.
Reason says " capitalism has sustained itself in far worse situations".
But it does need to be reshaped. As Australia's Rudd says: "This is a values debate: Gordon Gecko, greed and immediate gratification as against a culture that values a fair go, hard work and preparing for tomorrow."
Both are capitalism. But while the world wrings its hands over which incarnation will ultimately prevail, those with the stomach to invest now could get a bargain.
