Nearly two years ago, I received a call from a former college friend of mine. This was about the time the market was starting to recover from its drastic downturn in the fall of 2008, leaving many investors shaking their heads, selling off and vowing never to return to the Dow Jones again. During the phone conversation with my friend, he breathed a sigh of relief that he had thankfully moved money over into bonds and commodities. I was a bit stunned by this, as my friend had gone through the same economics and banking studies that I had. But with all due respect, I could hardly blame him. It was a time when the drumbeat of market naysayers was loud. Fear abounded as savers withheld contributions from tax-favored retirement plans, sold equity funds and stocks at rock-bottom prices and reinvested the money into “safe” bond funds, gold and the like.
Though my confidence was shaken, I was not stirred to act – no running with the bond crowd, no mining for gold. Instead, I was determined to buy ownership in good companies and brace myself for whatever animal invasion would occur…either running with the bulls or getting eaten by the bears
Now, in January 2011, the bulls have it. As columnist Will Deener writes in Bull Market Runs Past Hestitating Investors (Dallas Morning News, January 2), “…most small investors missed one of the greatest bull runs in Wall Street history.” He points out that the Dow Jones gained 77 percent since March 2009, which is more than the average bull market gain of 50 percent over the same time period.
It is time to put away the myths about investing that leave people to panic, make rush decisions and move money in the first place. While the recession has triggered worry and uncertainty, this is not the stock market of the Great Depression. Investment strategies that are oft-repeated by previous generations may no longer be effective in today's climate. Here are a few:
Myth 1: A guaranteed rate of return is always the best choice.buy tadalafil online