Stock Scary!

[boosami]

It might just be me noticing this, but it seems like a lot of people are afraid of stock and equivalate investing in mutual funds with investing in a single company stock. On at least one post, someone was unsure about investing in 401(k) with an employer match because of market aversion. Is it that people have seen Wall Street too many times? Or that people hear stock and think day-trading?

Yes, the market does not guarantee your principle investment. Yes, the market can be volatile. But investing in mutual funds gives you a choice about the level of risk you are willing to take and is not comparable to buying 1,000 shares of GOOG. Mutual funds are not necessarily made up of 100% stock and very conservative funds can consists of mostly, or all, bonds.

I know the market isn't too pleasing right now which is surely contributing to this fear, but I wonder if a lot of people simply do not understand how this whole thing works...

[Broken Arrow]

Yeah, there is a lot of fear in the streets. There was a huge "flight to safety" on Treasuries yesterday.

A lot of people out there, like my mother for example, all they see and know is whatever is being shown on the nightly news. And the news lately has been scary. It also doesn't help that she banks with Wachovia, prompting my aunt to panic and call my mom to see if her money is still there and so forth.

You know the saying, "Knowing just enough to be dangerous"? I think that's the situation here. A lot of people out know just enough about what's going on to worry, but not enough to know what to do about it.

Hopefully, this is one of those moments in time that we will all be able to look back and learn much from. For example, that's why passive investing is advocated so much for those who are not willing to delve into the depths of investing. That way, we can dollar-cost-average our way through even this moment in time, and in the process, buy while the market prices are so cheap.

[boosami]

There was a huge "flight to safety" on Treasuries yesterday.

The interest rate is so bad on government bonds, analysts are concerned no one will be investing in them. I guess we need people who know "just enough to be dangerous" to keep the government afloat! Otherwise, no one would be purchasing Treasury Securities. Though, I guess it's a moot point with the failure of the bailout (at least until some form of bailout passes).

[atomicrc11]

People need to have a financial plan and stick with it. What should I do now? Nothing because I already have a plan and will stick with it. I lost a lot of money on paper, but will gain it back later. Meanwhile my normal investments will be purchasing shares at a great discount. The shares I'm purchasing now could be the lowest since I've been investing in the stock market and could be a huge boost to my savings in the future.

[Broken Arrow]

Perfect, atomicrc11. Perfect.