I have been a trader in stocks, mutual funds and options since 1983, and have learned a lot of lessons. You might think that the most dangerous time for your investments is when there is an economic crisis and when the market crashes. I went thru the 2008 crash and I know how it feels, but most of my positions in that crash recovered and went on to give me profits eventually. It is never possible for both the gamblers and the house to win at the same time.
Stocks that were not sold only lost value on paper (if you go by mark to market valuation). In fact, there are studies that show that most markets dropped only by as much as 30-35% on the average in the worst market crashes and that when the market recovers it far exceeds those numbers. Your money is at its utmost risk between the time you bought the shares of stocks of the wrong company and the time when you are not looking. There are times when a gambler will win big time but just like me, mostly they lose.
To the prospective investors, however, who have the mistaken notion that the stock market is like a big gambling casino, allow me to share with you an explanation I gave to a friend who at one time was dissuading me from going into the market. The market is such that even the price of the shares of the wrong companies rise and fall just like all of the rest. Confident that your money would still be there by the time you wake up. That may not be the case with the wrong ones. I read, I keep myself informed, I use logic (despite the illogical market), I have time and I always consider the risks.
If your investing horizon is not long enough for the current market, Mr. Benanke’s recent pronouncement on QE reduction might scare you into selling as the market is still going down. Operated by NYSE Euronext it is the largest stock exchange in the world by both capital and trade value. The price change for each stock affects the day’s change in the index in proportion to the company’s market value.
AMEX (American Stock Exchange) Composite Index: Is a market value weighted index where the day to day price change for each stock is weighed by its market value. The index is used to judge the overall movement of the NYSE AMEX equities market. It is the oldest continuing US market index and is called the average” because it originally was computed by adding up stock prices and dividing that number by the number of stocks. The Dow” is one of the most closely watched United States indices for tracking stock market activity.