Other than the depression generation, I really don’t think there has been a more difficult time for individual investors than right now. In fact, even in my lifetime I’ve seen investing go from a “relatively” safe and predictable venture (good markets in the U.S. will often bring reasonable returns) to a market that can be very unpredictable and unsettling for the average investor. No longer is what markets do in the U.S. a good predictor for what markets will do elsewhere. We are now a nation of investors that must keep our eye on the international scene to truly understand where markets are going. Even with this knowledge, we can be deceived sometimes into thinking we have a handle on things, only to be kicked square in the seat by the unpredictability of it all. Case in point; the recent Euro zone loan to Spain to shore up its teetering economy. If you’ll recall, the market responded very positively to this action the day after, for awhile, and then gradually began to drift south. The Dow ended down by over 140 points that day. You ask, “What’s that all about?” So do I. I might add that the market was up the very next day, according to some reports, because of anticipated stimulus action. Who can figure, right, but this is the environment in which we strive to be successful investors today.
The complexity and mystery that comes to the market with international play is but one variable that faces today’s investor. There are a lot of other variables that didn’t seem to loom nearly so large in times past.
Joe Investor has to be asking himself these days if he is being dealt a straight hand. In other words, is the average investor really playing a game that’s fair for all. Certainly, there have to be some doubts about this. With heavy institutional investing and strong suspicions about those in the know getting first shot at the best investment opportunities, it weakens the stomach to know that some will always have the upper hand when it comes to “getting in first”. These concerns bring down the average investor’s confidence in his ability to play on even playing field. You can’t help but think how much of your gain is being siphoned off, because you came late to the table or didn’t have all the information available to others. For those that purchased Facebook stock, but weren’t the first to “get in”, you had to wonder if what you got with your purchase was the scraps of this sale. The declining price of this stock since it’s rollout should make you question this even more. So, “Use a financial planner”, you say. The chances are your financial planner isn’t close enough to the real action to have any more information than you do.
The whole issue of trust is another variable that looms larger today than it did in the past. It’s hard not to have less confidence in those … Read MoreRead More