Smart people sold their S&P 500 Index accounts, other equity mutual funds, and many of their stock holdings when they saw the market had dropped 10% to 15% from its peak. Were you asleep or what? The S&P 500 Index peaked at 1576.09 on October 11, 2007. Don’t tell me you didn’t notice the market was going down.
As you read the various articles about the change in our wealth over the past decade you come to the conclusion that all your savings and high earning investments in the stock market were for naught. On average you would have been better off putting your money in bank CDs because you would have at least earned some return. This simplistic view assumes that no one looks at their investments. Those writers think that most people just follow the broker’s advice and never question anything.
I contend that most people are not that lazy. After all, almost every news broadcast includes stock index averages. We all know their names. Dow Jones Industrial Average, Nasdaq, and S&P 500. Most of us looked at our investments. Each of us made decisions about those investments. I do not accept Ali Velshi’s assumption that most of us were dunderheads who simply followed broker advice without question. I am sure some people did blindly follow the “buy and hold” pitch given by the brokers.
Initially I did accept the notion that all of us blindly followed broker advice. Wait! We all did do some analysis. Most of us did read the newspapers. Many did make mistakes but some of us did the right thing and earned large amounts of money.
When the DJIA hit 666 last March I was skeptical that the bottom was there. I promised myself that after the average had grown by 20% I would reinvest. Then I looked at my earnings in GNMA and decided the market was too volatile. My decision. I made a mistake. I could have grown some of my money by about 63 %. My decision.
We read, we listen and we decide. There is still money to be made but we all take a chance. The poorest among investors simply can’t afford too much risk.
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