The Wall St. Journal has an article in this morning’s paper titled Bonus Pain Is Dish Still Served Bold. Basically, some studies have shown that investment banking bonuses may be down as much as 10% for this year. Before anyone worries about children not getting visits from Santa this Christmas, lets do a quick reality check. Even with the decrease, the average bonus will still exceed two million dollars.

To be honest, there isn’t anything wrong with the Wall St. crowd earning those types of bonuses even in a bad year. They work incredible hours, little work-life balance, and high levels of stress. When done with honest motives and competency, their work is a staple to keeping our market efficient and growing. Bottom line, it would probably take that kind of a bonus for me to live in New York City and adopt that lifestyle.

Lets do another quick reality check. Even though this is the first drop in bonuses since 2002, it isn’t a sign of a pending economic apocalypse. Some folks out there want to read the tea leaves with every little metric, measurement and report. When you peel it back, the science behind economics and finance is incredible sensitive to personal interpretation and bias. As a result, often times these tea readers use data as part of a forgone conclusion. Sure, we’ve got some market problems right now (news flash, lenders– it was a BAD idea to give an adjustable rate mortgage loan for 250k to someone with a 36k per year job).

Hey, we are humans and we make mistakes. Fortunately for us, the market is not human but has incredible skill at self preservation. When the individuals in the market knock it off balance, the market historically revalues itself back to a point of health. Unfortunately for us, the market is amoral and insensitive. When left to its own means (as it should be), consumers and investors sometimes have periods of pain and loss during this revaluations. But as my Dad always told me, thats exactly what makes experience one of the best teachers.