Buy LOW
and sell high.
Thus my anger when I saw this chart;
People are making less contributions to their 401k and other retirement plans, as the stock market has gone down.
This runs contrary to logic. Stocks, as just like anything else, be it video games, food or gas, you want the lowest price possible; ie-with the stock market tanking, NOW is the time to be buying stocks, not pulling back.
Normally I would deliver a hand holding explanation as to why this is and the merits for it, but I'm becoming more and more defeatist as I see an increasingly level of insurmountable ignorance when it comes to personal financial management in this country, that I'm just going to leave it at that.
There are two reasons that I see
ReplyDelete1. jobs are leaving, gas is going up, and every day the standard to living takes another turn for the worse. Investing requires optimism that even the markets themselves don't have.
2. Learning from the sub prime problems, if worse comes to worse, all the industry insiders will be saved by government cash and the investors will be cleaned out. So why finance your own poverty?
(If I'm worng then please tell me why because I do currently invest because I am told that's what I should do but I am very nervous about it)
Cap, I'm sure ignorance/fear is at least part of the problem, but I suspect there are other factors involved, too.
ReplyDeleteI mean, the money that used to go to these mutual funds... where is it going now?
@cap
ReplyDeleteI know your pain. But others loss is my gain. Hush, hush. I want to buy before any one wake up.
I did that with gold many years ago when New Yorker even call gold buyers are stupid.
Remember, wealth is relative. It is always small portion of society controlling larger portion of wealth in the world, except communist society. I want and believe majority stupid any way.
Not only it is time to buy stock, but also type of stock will go up in future.
Certain stock is not sustainable like cell phone company stock. Once federal information highway of wi-fi is in place. The cell phone stock will be in trouble unless the com forsee that and switch into other investment in time.
But when Obama becomes president, everything will be just fine because then we will have change...and hope. He will make our economy "fairer" by punishing all the rich people and all the evil oil companies. Didn't they all cause the sub-prime mess?
ReplyDelete(We are doomed.)
According to the laws of supply and demand, you should expect to see demand falling in correlation with prices falling.
ReplyDeleteSecondly, statistically speaking, there is no such thing as "low" or "high" prices. Even though prices have dropped 20%, there is no law of statistics that dicates they cannot fall another 20%.
It's not as simple as you make it out to be.
Sean,
ReplyDeleteYes, but that's the precise point I was trying to make. Your statement;
"According to the laws of supply and demand, you should expect to see demand falling in correlation with prices falling."
is the opposite of the law of demand. Prices and demand should be inversely related. This applies to consumables, and SHOULD apply to investments. But it doesn't as you surmised. However, that's my point, its a psychological change buyers and investors of stocks must make. They should treat stocks just like soda or X-Box.