From 1972 to 2004, one could turn on television and see Louis Rukeyser opining on the markets. And, they had quite a run. Take a look at this graph of stock values when Lou was on the air (denoted by the arrows). It has been flat to down since Lou passed away.
|Dow Jones Average from Wikipedia.|
Lou tutored baby boomers like me how to understand, and profit from, the markets and did it with a wry sense of humor. Wall $treet Week with Louis Rukeyser was the highest-rated program on PBS for many years.
This blog normally does not talk about the stock market or politics but I’m going to make an exception after the 500+ point drop today and the 1000+ drop the last ten days. I was inspired to do this post by a comment I heard from a young person today about how bad the market has been.
Let me begin by saying that I can’t forecast stock prices day to day nor can anyone else. That said,
To readers under the age of 40: Rejoice! This is a buying opportunity. Do you really believe that IBM has lost 1/8th of its value in less than two weeks? Of course not. It is the same quality company as it was in June, May, or any recent month. Now, the economy might not be great and it may be trending down but, if you are 40 or less, it doesn’t matter. Just think, if you could pay for 100 shares of IBM two weeks ago, you can get 112 shares for the same price today! Take this opportunity to load up your IRA or 401K with stocks at increasingly bargain prices.
To readers 55 or over: This, too, will pass!
I found these wise words from Lou after the 1987 crash (worse than today!). Please watch.
Second Update, 2pm 8/8/11: With the market down 500 and gold at 1,700/oz. (briefly), a friend asked me to repost this and add some additional commentary.
Remember the near panic in the fall of 2008? Remember people saying, “My 401K is wiped out!”? Well, the 401′s largely recovered in less than three years — unless you sold at the bottom and stayed out of the market. If you did that, you “locked in” your loss.
Keep in mind that — unless, for some personal reason you must buy or sell at this particular moment — these are paper losses. The only way they become real is if you cash out at this point.
Do I think the market will go down further? Keeping in mind my disclaimer above about no one can predict the market short or medium term, I do think further declines are more likely than short term gains. But, if you look at the drops as “buying opportunities” you can not only make up the difference, you can profit from the drops. Be smart and think through your strategy — water cooler rumors are never the way to go.
If you need help with investment strategy, this is my favorite book on the subject. It is well worth buying and reading.
Finally, watch Lou’s tape after the 1987 crash. The people who loved you two weeks ago still love you today! It is important to keep this in perspective.
As this blog is about meteorology and science, this is the last I intend to write on this subject. Hope the advice is helpful.