Fear and Loathing of the Stock Market

Unfortunately for most people when it comes to the stock market, they can’t live with it and can’t live without it.  With interest rates so low that many income investments can’t keep up with inflation, especially after taxes, the stock market has been a go to place for many looking for growth.  Many who are looking to retire, or want to keep pace with inflation, have been left with a choice of losing buying power by investing in low return income investments or taking on more risk by investing in the stock market.

The stock market seems like any relationship: when it’s good, it’s very good and when it’s bad, it can be depressing.  We love to love the markets when they’re cooperating but we sure hate to hate them when things fall apart.  We buy the ticket and take the ride but occasionally things get a little heavier than what we had in mind.

Recently, the Dow Jones and other stock market indices are testing the recent lows of the correction that occurred back in August of 2015.  The recent plunge in stock values are partly based on investor fear and the hatred of losing money.

Investors were burned in the Tech Bubble that started in 2000, having lost over 50% in the Dow industrials and the S&P 500.  More fear and loathing of the stock market occurred when the Financial Crisis hit in 2007 and investors saw another over 50% loss in the major indices when the market bottomed out on March 6, 2009.

Those downturns may have started to fade from memory since the market has recovered over 200% since 2009, which has made many investors, and Wall Street, very happy.  Yet it does make many wonder if this third longest bull market since the Great Depression is now running out of steam.  Based on the length of the current bull cycle and growth level that it has attained, it may make for a good excuse to sell if fears creep in when the last two cycles come back into memory.

Baby boomers, who are 78 million strong, have been in the distribution phase of their lives at 10,000 a day since 2008 when the first boomers turned 62.  This is a factor that may affect the markets in ways we can’t yet fully quantify.

  • Will millions of boomers become more conservative in retirement?
  • Will the energy of a whole generation taking massive amounts of distributions dilute stock market investing?

All energy flows to the whims of the great magnet so if your fear of the markets have you worried like a nervous night in Las Vegas I suggest you speak to an experienced financial advisor who has traversed this jungle before and has the wisdom and clarity to help you sort things out.

After all, fear and loathing is no way to go through life.

Guy A. Paredes, a Registered Representative offering securities and advisory services through Cetera Advisors LLC, member FINRA/SIPC.  Cetera is under separate ownership from any other named entity.

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