Overall: Dow Jones will always remain over my head
Overall: Dow Jones will always remain over my head
By: Bill Mead
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Posted by editor Tue Nov 30, 1999 00:00:00 PST
Viewed 666 times
0 responses 0 comments I have never been able to figure out what makes the stock market tick. I'm not sure anybody does. Experts are still arguing over what caused the stock market crash in 1929 that brought on the Great Depression. I have read several different explanations for what caused the crash but I can't remember what they said.
You're probably wondering why I care at all since I have only a part-time job and a bank account that, at this moment, is in the low one-figure range. The only reason I still check the Dow Jones averages is because some of the money we got when we sold our business has gone into the stock market through the guidance of an investment advisor. I get monthly reports on how we are doing but I don't understand them either. As dumb as I am, though, I can tell we aren't losing money so I don't ask many questions. Let well enough alone, I say.
What baffles me the most about the stock market are the reasons the experts give for why it flops around. One guy with all kinds of degrees will predict the market is going up and explains why. The next guru makes a good case the market is about to tank, offering exactly the same reasons. Then the Federal Reserve Board meets and says the economy is slowing down, suggesting bad times ahead. The next day the Dow Jones climbs 50 points. A few weeks later the fed board says the economy is improving, people are buying stuff like crazy, employment is high and guess what happens to the stock market. It nosedives. This doesn't make sense to me but what do I know?
Even though I don't know anything about the stock market I can't leave you dangling without leadership. You need answers, even if they are wrong, which mine are. So here goes: I think the market behaves insanely because so many of the nation's leading investors have a touch of insanity at worst, and a full-blown case of hysteria at the least.
Let me explain. A few weeks ago a tragic airplane accident in New York City sent the Dow Jones into a momentary tailspin. It's true we all wondered for a short time if terrorists were involved, but it's hard to understand why big-money moves were made at the stock exchange almost instantly and without any facts. I sure wouldn't want those nervous Nellies handling my dough.
So why do I bother reading stock market commentary? I guess it's to reassure myself I'm not the only person who tends to make mountains out of molehills. For example, if Acme Corporation misses its profit projection by one percent, the financial media throws a hissy fit and Acme's stock price goes into the toilet, even though it's still producing good returns. Conversely, if Hotshot, Inc. makes a loud splash for one quarter, its stock goes up like a rocket, leaving a bunch of widows and retirees with a pile of worthless paper the next quarter when the company goes into bankruptcy. In other words, it's all perception on Wall Street.
So why do I invest anything in the stock market when most of our meager resources are in dull, predictable municipal bonds? Our advisor says we need to play the stock market just a little as a hedge against inflation.
I have no idea what he means by that, which is probably a good thing.
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