Posted on 07/02/2008 5:46:56 PM PDT by TigerLikesRooster
The DOW is going below 10 before the end of Sept.
You know and I know that the stock market will continue to be a good investment for the foreseeable long-term future. They got burned and are gun shy to get back in. There is no talking to them. I guess that was my point... Then they say, “how much have you made in the last 5 years?” and I can’t point to any appreciation in the overall market in that time. So for now, they have the facts on their side.
Where is the counterpoint to their argument except to point to the bull markets over the past 100 years and say, “have faith, those days will come again.” But they don’t have faith. They don’t believe me.
Who is to say stocks won’t move sideways for 5 more years before the next bull. They just don’t believe in stock market returns anymore and they aren’t investing in equities or mutual funds. I have no clue where they are putting their money. If they are putting it in cash investments, then they have beat most of those in equities this year by a wide margin.
They don’t have faith in stocks. What can I say? They lost their life savings, relatively small as they were, and they are determined not to get burned again. I changed work locations and haven’t seen them since last November, but I’m sure they are looking at this bear market and screaming “See, I told you!”
That means they had it all in tech stocks. I'd be gun shy too..
I’m sorry, I must have not made it clear that they bought into the “New Economy” lie and put everything into the NASDAQ around the time that it peaked. Believe it or not, I had one co-worker who lost a good chunk of his money on WebVan and rode it all the way to the bottom. As it went down, he doubled down on the stock, thinking he was dollar-cost-averaging. Well, it went bust.
Yes, they all bought into the “New Economy” lie and they all invested heavily in tech stocks in 1999, just before the collapse. It may not be logical that they can’t get over their bad experience, but they just refuse to invest in stocks anymore. They are just compounding their mistakes.
That said, I am all in cash at this moment as I expect stocks to go down further and be a bad play for the next year. I’m in no hurry to get back in the market. I may well be wrong, but that’s how I see it.
Everybody has their own risk tolerance. What is a real shame is if people don't even take advantage of tax deferral programs. I have friends that won't even open a Roth IRA or make 403b contributions to CD or MM accounts. You can lead a horse to water, but you can't make it drink..
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