Friday, August 5, 2011

The Question

After we just experience a stock market crash of over 500 points on a single day, and over 1300 points over the past 10 trading days, it's time to ask the question again:

Which scenario would you prefer?

A. Stocks go up and remain at elevated prices for a long period of time.

B. Stocks go down and stay down for a number of years.

Which option did you pick? This is somewhat of a trick question because the best answer depends on your age and whether you are in the accumulation or the dispersion phase of your financial life.

If you are a retiree, then you should pray for scenario A.

If you are just hitting your highest earning years, you should rejoice if scenario B occurs. You want stock prices to be low so you get more dividends and earnings for the dollars you invest. Be happy when corrections like this one present you the opportunity to accumulate more shares on the cheap.

3 comments:

  1. Agreed with DIY Investor. I'd go with B since I'm still young.

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  2. Going with B!!! However, I need the market to rebound within 12 years or so.

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