May 9th, 2009
Whether You Believe the Rally is Real or Not, Don’t Deny it
I had an interesting discussion with a coworker this past week–a coworker who has many times said she doesn’t know much about investing. She apparently went to a seminar recently hosted by the company of a somewhat controversial personal finance figure. She said that they were offering to sell them a computerized system to teach them how to pick stocks, knowing when stocks hit their bottom and their tops and to buy and sell accordingly, and wanted to know my opinion on such a system.
My answer: “Buy a dart board. There’s no evidence that anyone can successfully time individual stocks or the broad market on a consistent basis.”
She continued to question me about how someone could make money in the stock market now when the market has been in decline for a year and a half.
My answer: “The stock market has suffered tremendous losses but has rallied about 30% in the last two months. ”
She seemed shocked at both answers. “How, with the economy so bad, can the stock market have gone up so much?”
I’m still not convinced that the current stock market rally will last, but I said that weeks ago and it’s now lasted for two months. In that time, the S&P 500 is up over 37% from its low point! I may not believe it, but I won’t deny it, and honestly, I’m thrilled about it. Please, please, please–do your homework on investing. I’m glad my coworker is asking these questions before throwing her money into something she doesn’t understand, and keep your eyes open–just because things in the economy have not been sterling doesn’t mean that the stock market is still in freefall. Keep up to date and don’t deny the rally!
