Monday, August 8, 2011

Stocks on Sale

This was my first real stock crash. I starting investing soon after the 2008 crash and therefore made out like a bandit for most of the past two years. Recently that stopped though. I lost around $2500 in just the past week.

In twenty years, I am not sure how I will handle stock crashes. It won't be hard to lose a years salary in a few hours if I keep investing at the rate I have been. For this one though, I am just debating if I should stop putting money in bonds for a few weeks so I can focus on stocks. I see little good reason for this crash and I expect the economy to keep on growing with at least the rate it grew in the past six months.

Still, that is assuming that stock value is linked to the economy. The baby boomers retiring just might kill off the next ten or twenty years of stock returns even if the economy does just fine. Who has the money to buy as fast as that generation will sell to fund their retirements? Now that stocks don't seem to be providing much in the way of dividends and haven't provided any return on investment for over a decade they may in fact be useless pieces of paper. Since shareholders have so much power over companies and companies are making so much money things are almost certain to get better in the thirty to seventy year time scale which I care about though.

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