| Most people are rather pleased when markets are | | | | half their value. However, blue chips still have an |
| doing well and they can see how their money grows | | | | average annual gain of 11 percent. |
| from statement to statement. People are not | | | | If you adjust o inflation, stocks do better than |
| tempted to mess around with their investments | | | | commodities. The inflation adjusted value of gold has |
| these times. But when markets are down, and bad | | | | more than doubled in the last 100 years. In the same |
| news come every week, the first reaction is that | | | | period, stock values have grown 8 times after |
| you should pull your money out. | | | | inflation. |
| This reaction is instinctive, and the problem with it is | | | | When you are investing in stock market, keep |
| that you sell low - lower than you got in - and if you | | | | yourself out of anything you don't understand. If you |
| want to buy stocks again after the downturn, you | | | | don't know how a company works and makes profit, |
| will have to pay more than you got out. You should | | | | forget about it. You can begin your investing career |
| look recession as a sale in your favorite store: this is | | | | with passive index funds, which are simple, cheap and |
| the time when you can buy the things you want at a | | | | more profitable than managed funds. |
| low price. This is not the time to sell, it is the time to | | | | There are no wonders in the stock market, so you |
| buy. | | | | should not be lured by high promises. Instead, look |
| If you are not convinced by this, you should be | | | | for reasonable returns: an investment with 7-8 |
| looking at market downturns in perspective. Usually | | | | percent return potential is much safer than any |
| recession in the U.S. lasts about eight months. In a | | | | promises about doubling your money. Also keep in |
| recession stock market usually goes down | | | | mind that except investments with fixed interest |
| dramatically, but it reaches the bottom line quickly | | | | rates there is no guarantee about the returns. |
| and start to grow again, usually before economic | | | | On the stock market there are things you should |
| indicators start to grow. | | | | avoid, because they can bring you financial or legal |
| Stock market after a recession usually comes back | | | | trouble: stay away from tax shelters, limited |
| stronger. In the last 40 years there have been 7 | | | | partnerships and proprietary investment products. |
| recessions, and stocks depreciated with as much as | | | | These usually have high fees and potential liabilities. |