Skip to footer

Stocks plunge, but don't say 'crash' just yet

Stocks took a hammering Wednesday, wiping out most of the gains made in 2014 and briefly touching eight-month lows. But don't let the current swoon in stocks  scare you into making rash investment decisions. 

|
Lucas Jackson/Reuters
A board showing the day's trading activity stands above the floor of the New York Stock Exchange in New York October 15, 2014. Stocks suffered their biggest losses in years and the dollar slumped on Wednesday after the latest inflation data from the United States and China fanned worries about a global slowdown, driving investors into safe-haven government debt.

I’ve heard predictions of the stock market’s imminent crash quite a few times—from those who might consider themselves knowledgeable in financial matters and, of course, from those who would probably not be considered part of the “in-the-know” financial club.

I’ve been following investing since my early 20s and have been a practicing financial planner/advisor for nine years, so this type of claim grabs my attention no matter how many times I hear it. It usually goes like this: “We talked to so-and-so, and he knows that the market is going to crash.”

Really?

This person knows? For sure?

Biggest question that I have for that person: When?

Typically, the “authority” spoken with has no experience in these matters (not by profession, certainly); so how come his/her crystal ball works so well and mine doesn’t? Reality check: Anyone who claims to know for a fact that the market will crash can only be right once in a blue moon. Anyone who keeps guessing the market will crash every day will be right eventually (what about all of those positive days, which far outweigh the negative market days?). These people should not be trusted because they belong in the same category of “advisors” who guarantee certain returns for their clients on equity/bond/mutual fund/ETF investments—it’s just not possible to know for sure, people.

Unfortunately, too many people—those not wise enough to know how to invest properly—invest based upon feelings of fear and greed, which will always cause rash decisions to be made and money to be lost. If you listen to anyone with an opinion on the market or stock investments, you’re bound to get some bad and (possibly) some decent advice.

Never base your financial future on what some random person thinks the stock market may or may not do. Talk to a true financial professional: a fiduciary such as a CPA who is knowledgeable in investing matters, or an experienced financial professional who works for a Registered Investment Advisory firm (no commissions, has a fiduciary responsibility to all clients). These are the types of people to help guide you properly with your financial plan in mind.

If you don’t have a financial plan, what good are those market investments going to do you? Oh, wait—they’re going to crash, so it doesn’t matter. Think about that next time you hear someone say that he or she knows when the market will crash.

Do yourself a favor: Make a budget (I know, it’s hard, but so is anything worthwhile). After you do that, construct a financial plan for your future. Get help from a qualified financial professional if you need it. You can then be prepared for that market crash that will definitely come… someday.

Learn more about Martin on NerdWallet’s Ask an Advisor.

The post How Can You Be So Sure the Market Will Crash? appeared first on NerdWallet News.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Stocks plunge, but don't say 'crash' just yet
Read this article in
https://www.csmonitor.com/Business/Saving-Money/2014/1015/Stocks-plunge-but-don-t-say-crash-just-yet
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe