Stock Market Information


Historically, people have always tried to look for investments that would consistently, year in and year out bring back a great return on investment. Now I think one of the best methods and sectors has always been the stock market. No being in my 40s I have been through the 1987 stock market crash. Now this crash differs from the bear market that we are currently in by the fact that it was basically a one-day crash. On October 19th the Dow Jones industrial average went down by over 500 points if you look at it through the eyes of an investor in 1987 this was a drop of over 22% in one day and compared to the stock market crash of 1929 in which the stock market went down 12.8% this was almost double that. The crazy part was if you had cash on the sideline after that day you would've been able to purchase many different stocks at bargain basement prices. The thing is that two days after the 1987 crash the Dow gained back more than 300 points and by the end of the year you would've still been up on your investment even if you held your stocks during the 1987 crash.

The key point to investing in the stock market is to never let the emotions of the masses influence you. Imagine in 1987 on that fateful day if you own any stocks during the crash and you would've listened to what everyone was saying, and everybody thought that the sky was falling and this is why there was mass hysteria and mass selling, but looking back at it now it is a great experience to have when you experience future crashes in the stock market. The main difference is between the stock market today and the stock markets during the periods of 1922 to 1960 is that these days future bull markets and passed bull markets have always been influenced by one main sector or one new sector going up on speculation future explosive earnings. From 1997 to late 2000 the new sector that started to propel the stock market upward were the Internet stocks. Now if you were invested during this time you would've seen incredible gains just by holding onto stocks for six months to a year. For instance during a one year time span Qualcom went up from $18 a share all the way up to $1000 this year before it started splitting. If you had gone back to 1960 and told an investor that is stock was going to go up this much in one year you would have laughed in-your-face. These are the dynamics of the current stock market, in other words, it is very volatile and you need to keep up-to-date daily on current financial events.

Right now I'm not in any stocks, but as I always tell most of my friends the stock market always factors in the worst economic times six months before they happen so during this latest global mortgage -- credit crunch that key to watch out for is when the Dow Jones starts to level off and finds a healthy support level and stays there for a few months. I personally feel in my opinion of course which is not a professional opinion the stock market will probably start to level off sometime in mid-2009 which I feel is six months ahead of when the mortgage crisis will be over. It will be interesting in retrospect to see if I'm right from wrong.