Friday, March 6, 2009
The sky is falling ...
The stock market is fluctuating daily in a downward spiral. The Dow is down. The S&P is down. There is great fear that the market will crash. While I can understand some of the fear in the market, it is not necessarily relevant to all Americans. When we look at th amount of Americans that actually own stocks and are invested in the stock market, it is not necessarily your every day American citizen. It is the Middle and Upper Class, more so the Upper Class. Thus the ordinary American is saying, “So what!, I am about to lose my house, car and my family is barely eating”. What has not been realized is that the fluctuations in the market and the lower numbers can be correlated with the middle class that are no longer employed. Middle Class that owned stock are selling their stocks to meet their basic needs. This is not being taken into account. We seem to think this is about trading stock and it is not. It is about basic survival. As many stockholders do not have confidence in the very organization that are on the stock market, they are selling their stocks and cashing in their 401K plans to have their own money readily available. The stock market is really a "big show" that is developed to convince Americans that we are in dire straits when in fact it is the companies on the stock market that are experiencing the troubles and why would you buy stock in a CitiGroup or a GM when the stock may be worthless based on the sustainability of the organization. It is basic common sense and not economics. I liken this to Chicken Little and the "sky is falling". In reality, there is a rationale explanation for the stock market decreases that is not being acknowledged. There is the pretense that it based on the fact that people are selling and buying stocks because the are distrustful of the market. That is only part of the truth. It is because Americans are shifting their priorities to meet their new existence of joblessness and homelessness. If you had a choice to keep your money in stocks or to save your home or feed your family, then you will sell the stocks. Also, as companies layoff employees they are selling the stocks as they relinquish all ties to the organization. This has never been mentioned as a potential reason for the lower numbers and it never will be as the "powers to be" want to continue instilling the fear and intrepidation into the hearts of Americans on the economy.
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Its ok for the stock market to be down... its a good thing. It gives young investors like myself the opportunity to buy stocks that may be very valuable at a low price. If history has shown anything, the market always balances out after going through heavy turmoil. In my opinion, people old enough to own a home, 30 and up... should start thinking about rebalancing their portfolios. Stocks have more risk, so at a young age, owning 90% stock is good, but as you get older, spread it into mutual funds, bonds, and money market accounts, and cds. Can I also point out, and not to be negative... that these "middle class families" that may need to sell their stocks, are also the families that made the economy once thrive? Yes. Remember Nintendo Wii, Hummers,VISIO tvs, splurging on christmas gifts, sugar coated cereal, and then the 100 dollar bottle of medication the shrink told you to give your kid after stimulating them with all of that? Sorry, I own a scooter,(room for one),bring a back pack to the grocery store,(enough food for one), dont own a tv,live by myself, and dump as much money into a Roth IRA invested in mutual funds as possible. It may sound selfish, but I prefer to call it responsible. I think when enough people recognize social responsibility, the world will be more in balance. (Mari I love you, dont flunk me its just my opinion lmao)
ReplyDeleteI agree that the stock market being down may be a good thing. Although my husband and I are struggling with finances, we have definately considered investing in stocks in the near future. I mean, come on, how much lower could they possibly get before eventually increasing? We are part of the "Middle Class" that Brian spoke of. We have made the mistakes that many do by spoiling our kids with whatever their hearts desire, purchasing the big tvs, etc. If we were to tighten our budgets with needless expenses, we could probably come up with a decent chunk of money to invest. Those investments, if done properly, could eventually gain us a nice portfolio for the future. If more people were to think this same way, do you think that we all would be doing our part with helping the economy (stock market), or would we just be doing more harm by not spending our money on things that keep companies afloat? Regardless, you have both made me think.
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