The Great Depression

[kass_rants]

Okay. Listen up! I don't care what the media has been screaming about. This is NOT another Great Depression. I'm going to explain to you why.

Kass's Top Three Reasons Why This is Not Another Great DepressionThe Great Depression began with the crash of the stock market in October 1929 (the crashes are always in October...). Many investors

Comments

[faireraven]

*bingo*

Before I left on vacation, one of my coworkers asked me if I thought he should stop putting money into his 401K (ever since I actually revealed I know *something* about 401K status and what some of the rules are, people seem to come to me for financial advice. Having been part of Primerica at some point might have something to do with that).

I asked him if he was insane.

He's a sales guy. He works based on commissions, so I hate to say it, his understanding of money is "the harder I bust my balls, the more I get", he doesn't really understand money itself.

I told him that now was the perfect time to get *into* the market. If he wanted to take his existing 401K funds and put them into more stable value funds rather than growth funds, it would only make sense if he was retireing in the next five years (which since he's 26, is highly unlikely). I told him flat out that unless the entire stock market plunged to zero in the next three months, putting money in *now* was going to be the best thing he could do for himself.

I still don't think he believed me.

[kass_rants]

Aboslutely! A 26-year-old should take all of his money and throw it into stock-heavy mutual funds like there is no tomorrow. Nothing makes money over the long term like stocks. Nothing. And mutual funds are managed by fund managers who pick the most stable and long-term stocks in which to invest (and they switch when it makes the most sense).

[faireraven]

Yeah, my energy fund went gangbusters in the last three years. Almost tripled.

I lost a chunk recently. It went back down to about double the original.

Okay, so it sank. It'll go back up. It's not "money" until I take it out of the market anyways, and energy will always be needed. If I don't take it out in the next year or two, I will be fine. Hell, if I took it out today (which would be stupid), I'd still be fine, because I'd still have more money than I did when I put it in.

Just about everything I have is in mutual funds of some kind or another. 401K's are nothing but funds anyways. It makes long term sense to let someone else manage my money, as long as they have proven themselves to be right more often than not (everyone's wrong some time, just play the averages). And I look for the "right" over the 10 year term, not the two year. Someone may have been right and grown something 30% two years ago, but negative 20% this year. That's not someone I want to go with. On the other hand, if I see someone who did 16% two years ago and 14% this year, I'm far more likely to go with him. Proven track records and all that.

Okay, even my money manager asked me at one point what I need him for... But then again, he's a friend of mine. :) Between his advice and my dad's advice (dad reads MorningStar like it's his new religion), I follow my instincts, and do okay over the long haul.

I usually tend to agree with your advice, so I figure if I'm already doing what you say I should be, I'm not doing badly. :)