So what?
If you believe that we are in a horrible tailspin that will unleash the next Great Depression, congratulations. You've fallen prey to the bad is good / if-it-bleeds-it-leads media with election year super-hyped goodness. Despite the fact that *I* realize that this is their angle, I think that it's getting out of hand and potentially irresponsible.
I liken the media hype to an obnoxious commercial currently running for Splenda brand sweetener. Visualize with me....
"They'll be drinking sugary drinks by the gallon. You're headed for, a SUGAR SITUATION!"
Puh-lease....
Take, for example, the recent failure of IndyMac Bank. On Monday morning, there were reports of lines wrapping around blocks and angry customers filling the streets. 95% of these people can count themselves as being sucked in by this abusive and out-of-control media machine. Understand that I didn't just pull the 95% out of a hat. It comes from the following facts:
- IndyMac bank had 200,000 customers as of its closing
- 190,000 of them had accounts below FDIC insurance limits.
You might worry that bank failures are big news. Well, that may be, but here's some very interesting food for thought. So far this year, 5 banks have failed. 4 out of 5 of those never broke the national news. This is nowhere near a record, not even for recent history, or even this millenium. In 2002, 12 banks, that's right TWELVE banks failed and were taken over by the FDIC. Does anyone remember any of them, or even that it occurred? I'll acknowledge your silence as a valid answer in the negatory.
Now let's turn to the stock market. I would like to preface this by saying that basic predictions in the stock market are similar to basic weather forecasting. One very rudimentary form of forecasting is the persistence method. This says that the weather in the near future will be similar to the weather now. This type of forecasting is quite accurate for the short term, but becomes rapidly inaccurate over the long term. Forecasting the stock market is similar. The market is down today, it's probably going to be similar tomorrow, but over the long term, we must use a different method.
So what does the long term say? Well, if we use history as our guide, we are at a very opportunistic time in the history of the market. Over 97% of all 10 year time spans in the history of the stock market (since 1924) have shown positive returns. (The two losing spans were in the 20's and related to run-ups and the great crash of '29.) (source) If I had money to invest, it would be an advantageous time to invest in broad index funds. Take the Dow, for example. The historical high for the DJIA is 14,279 (back in October 2007). Today we are at 11,446. If we assume that we will pull out of this and the economy will climb again, than one who invests now in an index tracking the Dow stands to gain over 24% on its climb back to the previous high. Even if one assumes that it takes 2 years for the economy to recover, the return is still 12% per year, which, doing some quick compound interest math, says that going at that rate, your money would double in 5 years. Isn't math great?
Taking these FACTS into account, is there a reason to be concerned? Probably, but only based on the idea that it's important to be aware of current events to speak intelligently about them. Is there a reason to be worried? Nope.
Get over it, and if you can't, turn off the TV and "stay off the damn internet."*
Other news:
Thanks for the responses! My personal start page has 3 tabs, Home (which contains a hodge podge of news and bookmarks), fun (satire, Fark headlines, and travel dreaming), and tech (useful tech gadgets and tech related RSS feeds). It's really in need of revision. Perhaps I'll make a point of revamping it and posting it here.
* - Quote attributed to Professor Michael Leckrone, various instances.
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