Market Risk

We read about the stock market on the bottom of the television screen; in a newspaper; on an app on our cell phone or I-pad; from a friend’s friend who is an investor. It is at the center of our country’s financial gravity. In 2021, it was reported that in just a single 5-month period, more money was put into stock-based funds than in the previous 12 years combined! It certainly makes sense, when we consider that 401(k) & 403(b) plans are the most contributed to plans among those offered by employers. Taking advantage of a great investor making you money or an employee match certainly has its advantages.

But there have been 7 down-market distributions over the last 20 years. 3 of them have been major - averaging around 50% for each. 

• The stock market was booming before the 2002 stock market crash which was due to the infamous dotcom boom. This bubble was created due to the skyrocketing in technology stock equity.

• In 2008 many stocks experienced some of the biggest drops they’ve ever endured from a crash due to defaults on mortgage-backed securities.

• In the 2020 Coronavirus Crash, there were record downturns in the stock market due to the global pandemic.

Now, if you are in your 30’s and 40’s you have lost money. But if you are in your late 50’s and into your 60’s and 70’s, then you have lost money and time.

Market crashes are due to variables that you cannot control and are connected to ‘trends’ - waves - of innovation that are instituted by the corporate world. There are a great many variables that affect both them and consequently the economy at large (including your wallet). These variables are not mutually exclusive. They are interdependent.

What affects the stock markets and our economy at large?

Everything from Debt, Unemployment, GDP – Gross Domestic Product, Social Security, Interest Rates, National Defense, Medicare, Medicaid, and inflation, to the personal and business financial returns and expenditures of each dollar in the economy.

Revenue, CD accounts, stocks, mortgage-backed securities, company securities, defined benefit plans, defined contribution plans, bonds, bank interests, loans, credit and the list goes on. Businesses & Corporations that are shaped and molded by the public opinion of their brand and the social currency that the image their brand carries regardless of its true worth in utilitarian value have a currency that is interdependent with many of these factors. 

The markets are volatile. Great gains in the stock market are easy to enjoy watching. However, though stocks are always at the center of gravity in the financial world, be advised: What goes up must come down. And if the past is any indicator of the future, there will be another crash – and a serious one at that. The question is: Will you lose time, money, or both?