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business newsIf You're Losing Money in the Stock Market, It's Your Fault
By
Michael Comeau
May 11, 2010 12:10 pm
Investing in stocks entails a lot of risk, and no matter how much effort you put in, there's zero guarantee of success.
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But have no fear, the SEC and exchanges know you're in trouble and they're here to help! The NYSE Euronext (NYX) and NASDAQ OMX (NDAQ) groups will soon institute new circuit-breakers to curtail steep declines in the indices and individual stocks. I assume that stocks going up will continue to do so undisturbed.
It's the usual goal of making the highly risky equities asset class more cuddly so the public will shut up and continue pumping money into their 401(k)s and Fidelity trading accounts.
Now if I had to pick one psychological phenomenon that's pervasive among investors, I'd go with the self-serving bias. It means that one takes credit for successes, but assigns blame for failures to external forces.
The 200% you made from 2003 to 2007? That's all you. You were smart enough to get in on Apple (AAPL) early, you bought into the Google (GOOG) IPO over your spouse’s wishes, and you rode that bull market to glory. That shiny new Audi in the driveway? It's all because of you! You you you!
But the 50% you lost in 2008? That wasn't your fault. It was President Bush, Ben Bernanke, those jackasses at Bear Stearns (JPM) and Lehman Brothers, and all the idiots that bought houses they couldn't afford.
And today's craziness? It's all because the leveraged ETFs, evil hedge-fund honchos, and broken computers are conspiring to ruin your financial life.
If everyone would just be reasonable, the world would be a better place. Yes, and if New York drivers started using turn signals, we'd have less accidents. There isn't much straight talk in the financial media world, but I'm going to do my best to dish it out right here.
The truth is, if you're losing money in stocks, it's all your fault because you chose to get in the game.
Did you not know that the housing market just collapsed? Did you forget Enron and Worldcom? Or the bursting of the tech bubble? The Asian financial crisis? September 11, 2001? The saving and loan crisis? The 1970s oil shock? The Great Depression? In other words, how could anyone with access to electricity and running water get to this point in time without realizing that we live in a crazy world where a lot of bad stuff happens?
No positions in stocks mentioned.
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