Stock Market Woes

Does anyone else remember how the $700 Billion (Which became $850 Billion after being laden with $150 Billion in pork) was pitched to us? It had to be done right away, there was no time to lose, or we were all going to regret it.

I wonder what would have happened without the bailout? Would the Stock Market have lost a bunch of value? Well, that can't be it, because that happened anyway. Would all those mortgages in default have gone into foreclosure? No, that can't be it either, because that is still happening too. Maybe the point was so that Politicians could pound their own chests and pronounce that they had taken decisive action? Oh yeah, that must be it, because, other than plunging us another (almost) Trillion dollars in debt, that seems to be the only thing that has happened.

A couple of things to understand about the Stock Market. When you see a steady decline over the course of the day, and then, all of a sudden it nosedives in the closing minutes, that is because certain thresholds have been reached which trigger automatic sell orders in the computer systems at the big investment houses, and they just start selling stocks off like crazy. This could have a cascading effect if it didn't happen so close to the end of the day. It's a weakness in the system, and something they really need to fix. Often you see evidence of this happening because at the opening bell the following day, the market will rally, as the people at those investment houses try to buy back some of the stocks that they never intended to sell. So, a lot of the day to day, and minute to minute following of the market is meaningless.

Another thing is this, bailing on the stock market doesn't make any sense at this point. For the most part, if you have money in the stock market, you bought in at a much higher price than what we have right now. Have you heard the old adage, "Buy low, sell high"? Selling now would be opposite of that. If you have money in any single stock, well, that wasn't really a very good idea in any event, because there is certainly no guarantee that a single stock won't fall all the way to zero, so you have to make a call on what to do with that, but if you're in a good Mutual Fund with a good long track record, or a 401k or IRA which is invested in such funds, the best financial minds are in agreement, you need to sit tight. The best indicator of future performance is past performance, and 100% of the 10 year periods in the history of the Stock Market have made money, rather than lost.

A lot of people have bailed out on the fear, it would seem, that the market might crash all the way to zero, and they will fully lose all the money that they have. The problem with this way of thinking is that in order for a complete collapse of the stock market to happen, it would take a complete collapse of our economy, in which case money in the bank, or even paper money in your mattress will be totally worthless. And for those of you who think that all your gold is going to save you, the truth is that when an economy collapses, gold doesn't do any good either. Gold is not an accepted medium of exchange if people don't have food to eat, clothes to wear, or a place to rest their heads. All that has value in those cases are things that fill an immediate need, and gold or Federal Reserve Notes simply won't cut it.

I'm not telling people what to do, each of us has to make up our own minds. For me, while I'm not scraping money together to dump into the stock market, I am continuing to contribute to my 401k at the same rate that I have been for years now. It's value is down quite a bit from where it used to be, but, I expect it to recover, and the money I'm putting in now will make a lot more over time than that same money would have if the market had stayed strong.

In short, this is not a time to panic, this is a time to carefully consider options, to be coldly calculating, and remain on an even keel. Don't let the news media get to you. The fundamentals of our economy are strong, because that's you and me, the American workforce, the most productive, and most innovative workforce in the world. The answer to this crisis isn't for the Government to get more involved, it's for the Government to get off the back of the American workforce, and let us do what we do best, work, produce, create, and do. And for the Government to get off the backs of our businesses, large and small, and free them up to put us to work, that is how we can fix this problem. Part of this is taxes, Obama wants to ratchet up taxes on those very businesses, McCain does not. On yet one more front, the choice is clear.