Can You Stomach The Unstable Stock Market?
The stock markets of the world are in a strange flux these days. It seems lately like it’s a daily occurrence to have the market, most specifically Dow Jones, either dropping more than 400 points a day or jumping more than 400 points a day. It’s enough to make all of us start questioning whether being in the stock market is a wise move.
To take a snapshot of how things can be, let’s look to two weeks ago. The news for two days was extremely scary. First there was a drop of more than 500 points, followed by a second day drop of around 400 points. One more day dropped 400 points as well. But two of those days increased by more than 400 points, and by the end of a tumultuous week, the Dow has lost only 175 points overall, which isn’t bad.
Almost every analyst I talk to says the same thing; if you’re in it for the long haul leave your money alone because long term you’ll make money. Whereas I believe this “could be” right, I’m not so sure such a blanket statement is correct. I think it depends on whether you have your money in just a few individual stocks or mutual fund accounts, which industries you have stocks in, and how closely either you or your money manager is following everything.
For instance, the housing industry is still in a state of flux, and some predictions are saying the mess could last until 2013. If you had your money in real estate how comfortable are you in saying “I’ll just leave it there another 3 years or so because it’ll bounce back”? By the same token, one of the strongest industries, one that weathered the storm of negative progress, was health care. Do you believe those investors are feeling pretty smug and comfortable right now, even with the markets drastic ups and downs? And I’m not talking pharmaceutical companies either.
This is why you have to stay on top of your investments. You need to look at the mail that comes to you regarding your investment account. You need to talk to your money manager, if it’s not you, at least once every couple of months, just to see where you stand.
That’s where I fell off the table. I had someone I thought was looking out for my interests, so I never opened any of the mail. It wasn’t until I finally opened it one day, saw my investment had fallen around 65%, and then tried to call him when I learned he wasn’t there anymore and no one was managing my money. Major lesson learned.
Do you have the stomach for the stock market, whichever one you’re in? Can you handle the ups and downs of the market? I hope so; I’m not so sure I can just yet.