What to make of short term market swings? Don’t let them fool you:

US To Face Poor Economy for 10-15 Years: Robertson

Companies can only prosper when there are customers, and if customers have no cash and their credit is taken away, they can’t buy.  Where do corporate profits and growth come from if there are no buyers?  (Other than the illusory “productivity increases” – which does not equal “profitability”.)

A friend asked me yesterday what to do: In her retirement account, she’s lost all of her gains over the past 5 years plus lost 15% of her principal (not including fees).   She asked, should she sell all her funds and invest only in money market funds?

My question to her: Do you really think the market will perform well enough in the next 2-3 years to not only “win”  your 15% back but earn more for you?   Do you want to learn enough about stocks and investing to take control of your own money to make that happen, and not to just take your broker’s word about “asset allocation” and what to do with your investment? (It didn’t help that her accounts are with a big-name brokerage making ridiculous fees for buying 6 funds that essentially trade all the same stocks…)

Both of her answers were no.  Given that, she decided.

She is selling her funds, and putting them into money market accounts for now, until she can learn more about buying bonds and CDs inside her retirement account, or, until it looks like the market is actually rebounding somehow.  She HATES the market, HATES stocks.  Not everyone should be in mutual funds in their 401(K).  The myths of defined benefit plans is hurting a lot of people. She got in because people told her that “historically the stock market returns 11%” or pick your favorite number.  That historical number has NOTHING to do with what anyone can or will earn. It was never a sure thing, as so many are finding out right now.

Remember: I know nothing about investing, I’m not a professional, and have no idea what anyone should do with their money. Ever.

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