March 3rd, 2009
07:05 PM GMT
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NEW YORK– When it seems like there is no hope, when the economy is said to be in "shambles" (as Warren Buffett aptly described it), THAT is exactly the time to take a deep breath, step in and buy stocks.

New York traders still on the floor Tuesday.
New York traders still on the floor Tuesday.

At least that used to be the common wisdom.

Nowadays, investors are scrambling to sell into strength in an attempt to hang onto whatever money they have left.

Even with stocks at 12-year lows, there doesn't seem to be anyone willing to buy.

Baby boomers have lost more money than most can realistically recover in time for retirement. Younger workers have seen a decade of savings evaporate.

When discussing the latest headlines of yet another tycoon charged with swindling billions from investors, a friend of mine recently commented, "Ponzi schemes? I think the whole system is one big ponzi scheme."

She is not alone. Investors are beginning to wonder if they too were duped into believing stocks were the answer.

The system worked for executives who made millions in salaries and prospered off of stock options on the way up.

But what about the shareholders? What were they left with? Companies worth a fraction of their value. Stock portfolios decimated.

I am not sure I am ready to throw in the towel yet, but what about you? Have you lost faith in the stock market? If so, how do you plan to pay for retirement?

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Filed under: Business


soundoff (33 Responses)
  1. Nam(South Korea,Busan)

    The Global New Deal......coming.......2009.04.02.....G20..in London.

    March 3, 2009 at 8:09 pm |
  2. lajide2003

    Maggie i beleive you;
    I will quote what the brilliant economist Karl Marx said more thatn a century ago; The inherent contradictions in capitalism, would lead to the inevitable destruction of capitalism! His prediction appears to seem prophetic and is being fulfilled right now!

    March 3, 2009 at 8:46 pm |
  3. Per Holmlund

    Yesterday goodbye tomorrow a good buy

    A sell out and then, hopefully, the traditionally “dividend rally” end March to May. And then a recovery cycle from where ever the market hit bottom after the dividend rally. One recovery cycle that probably want lift the market to new all time highs. So forget buy and hold and try buy and sell. Don’t look for big bulls, hunt rabbits.

    The financial mega trend has com to an end and we will have to ride old time market cycles in a crises economy for some time. Cycles that could develop with lover tops. A disaster for long pension holdings put profits for steppers.

    Don’t forget what the sign for chaos means in Chinese: crises and possibilities.

    (That’s today’s map, tomorrow it can change if new icebergs become visible.)

    March 3, 2009 at 9:40 pm |
  4. Emmanuel Decarpentrie

    I too believe the whole system used to be comparable to one big ponzi scheme! Real-estate, stocks, all have been artificially inflated by easy money, greed and speculation. The prospect of big return made it possible to run this scam for so many years. It all comes down to the same old trick... If you think about it, that's what "fiat money" and "fractional reserve banking" is all about: an illusion, a trick, a fraud. It doesn't really matter if it's a legal fraud or not, the fact of the matter is that it is wrong, and it is not working at all: there always comes a moment where we can't print enough money to maintain the "illusion of wealth"! That's exactly what is happening now!

    March 3, 2009 at 10:24 pm |
  5. Juergen Schlenzig

    If I were CEO of a public company, I'd be worried about my company having a share value under what even the books may reflect.
    This happend occasionally with some companies in the past, right now with so many and heavy under real value.
    There is a hole in the system that needs to be fixed, because it is a serious threat for such companies, their employees and investors.
    I'd feel forced to come up with a whatever solution to protect my company. Don't know how so far, but knowing what direction to think is already a good start.

    March 4, 2009 at 2:10 am |
  6. samantha

    Sure, It's easy to say that we were all duped into investing in the stock market now that it has taken such a brutal hit, but there were times when the market had high returns. Where was the complaining then? Overall, .my small investments have still returned more than if I had just left the money in the bank.

    March 4, 2009 at 3:44 am |
  7. Thomas

    I have not lost faith in stocks. What needs to be done is what many of these so called "investment clubs" do. Many of them thoroughly investigate the company and its management before investing any of their money into the company. Invest in a company that you believe in, that you can see this company is actually delivering a sustainable philosophy of business and operations. If I believe in what the company is doing in ALL aspects of its operation, then I will invest.

    Of course the ride will be bumpy, however you are in the drivers seat, you make the call as far as keeping your money in or getting out. I believe there are better times ahead!

    March 4, 2009 at 8:48 am |
  8. miroslava

    I am not sure I am ready to throw in the towel yet, but what about you? Have you lost faith in the stock market? If so, how do you plan to pay for retirement?

    I think the small business is the our future!
    http://www.theageofnepotism.com

    March 4, 2009 at 10:57 am |
  9. Nova Rom

    the real question to be answered is who really benefits from this order? once you have that answered you can begin to search for a solution.

    March 4, 2009 at 1:48 pm |
  10. Premo Sewnunan

    I feel the problem is not the stock market. That's just a vehicle. The problem is with the driver. The biggest risk when it comes to investing is the person facing you in the mirror.

    There are two things that have(and will keep) kept people poor and middle class. First, is financial ignorance and second is greed.

    Most people were(and are) blissfully ignorant when it comes to money. They prefer to listen to "experts", family, friends, etc instead of thinking for themselves. This is where problem starts, not relying on your own judgement, but someone else's opinion.

    People need to realise that "experts" and analysts are paid to project a certain view, their function is not to inform you. That is how the financial "system" is set up. It is set up so most people can fail.

    Greed, well, I really don't have to go into much discussion on this one.

    From my point of view, the majority of people should not just take things lying down and accept their "fate". They should dust themselves off and re-look at how they view money and how the invest.

    A true investor doesn't care what the market is doing, he makes money whether the market goes up, down or sideways.

    Benjamin Graham dedicated an entire chapter in "The Intelligent Investor" on what exactly defines an investor. I believe once most people read that chapter, they will come to realise that they were not anywhere close to being classified as an investor.

    To end off, those trillions of dollars that were wiped off the market did not disappear, they merely changed hands. Money doesn't disappear, it changes hands.

    Regards
    Premo I Sewnunan

    March 4, 2009 at 1:59 pm |
  11. Mehmet Kurtkaya

    But of course! Reagan capitalism is one big pyramid scheme. When there is no new money coming in, the whole system collapses.

    March 4, 2009 at 7:22 pm |
  12. RALPH

    Though I've never invested a dime in the stock market, so have never gained or lost from it. I have allways thought it was just another big Pyramid scheme and wondered why it was legal anyway. You can slice an orange in as many slices as you want and sell them like stock. But, when done it's still just one orange and only worth so much. Someone will be sorry in the end....

    March 4, 2009 at 10:12 pm |
  13. Chris Dunleavy (Mr)

    Hi Maggie!
    The problem with the stock market is opportunism, short term thinking and the herd instinct. The stock market that exists today is nothing like what was intended by the creators of the concept of the joint stock company. The intent was for companys to raise capital from investors by selling shares. The investors were then interested in the success of the business and were rewarded with dividends. Today, all investors are interested in is making short term capital gains by buying and selling shares with no regard at all for the businesses that they invest in. They may as well go to Las Vegas and play the tables. The antidote? Regulation to force investors to hold shares for a reasonable period before they can sell. Not much fun for those who live on the short term trades, but a more stable business environment. At least investors would have some real interest in the future of the businesses they invest in, rather than how much profit they can make or loss they can avoid over a day's trading.
    Your reports are always interesting – keep up the good work!

    March 5, 2009 at 3:48 am |
  14. Andrew Smith

    These are turbulent days. Are the old rules of investment being challenged by the current squeeze? Prudence used to say that diversification is the key to good returns and a safe future. But what diversified portfolio has survived intact, and who would be brave enough to recommend a spread right now? My safety is in gold right now until a genius out there comes up with some new ideas. Lord knows we need them!

    March 5, 2009 at 8:30 am |
  15. John

    The more complex the problem ( and I don't think our planet has faced such challenges as we now do ) the greater the need for a clear outline of the cause or causes. Only when this has been identified can we ever begin to effectively address the problem. The cause of this recession is ' GREED ' and the perverse acceptance that ' GREED ' was somehow good. Focus on this & correct the perception, and u've at least made a real start.

    March 5, 2009 at 11:59 pm |
  16. Robert J Marchello

    Maggie,

    First I believe the gains of the last 8 years have all been illusionary.

    The corner stone of this illusion has been the housing industry and all the industries that supported it. Once banks went outside the 25% guideline and dip into the subprime sector it was simply a matter of time. Couple that with ARM’S and the, we have got to have it mentality, we where destine for crisis. Adding insult to injury was the deregulation of a broad spectrum of industries, least of which was the home appraisal trade for the purpose of securitization of home loans.

    Deregulation as promoted by the so call conservatives of the day has one serious flaw, the assumption that humans will do what if right. What history is once again proving is that deregulation, less government over site, only servers to give those individuals of unscrupulous nature the platform for unregulated activity.

    As you noted also at the center of this storm has be the corporate system that on served to enrich the top executives. Stockholders stop demanding their fair share of the profits in dividends and where satisfied with gains simply in easily manipulated market value of the stock.

    I don’t believe we will see a recovery in the stock market for some time and only those stocks where annual dividends are equal to or better then 10% of the share price.

    March 6, 2009 at 5:27 am |
  17. Patrick from Bäle

    The crisis is global. It is affecting nearly all of mankind. Is it not telling us, crying out, shouting out to us that this is our time, our
    "epoch-for-change," and that, in order for political, social and economic stability to exist in the future, society needs to question, find new meaning and new purpose in almost everything we do? If so, then we need to make changes, not necessarily all at once with large sums of borrowed, bailout money but with firm new precedents that redeem and repair, restructure and rejuvenate society, as we strive to 'do-the-right-thing,' rather than, as before, the most politically or economically astute. It's by-partisan. It's probably our time, maybe our only chance, an opportunity, for "CHANGE." Perhaps our planet, society, humanity, mankind cannot afford to miss this 'chance-for-change.'

    Question: Would the stock market rejuvenate itself if it were based on different principles? Is the stock market failing now because it is fundamentally flawed? It has rewarded some in the past but what about today, in a time of crisis, when stability and security is needed? Is now the time to re-examine and restructure its purpose and function? Doesn't "economic mankind" need for its future, more security and stability, less risk and more benefits to the broadest possible number of people? Our economic future and stability may depend on the right answer to this question. If we are honest, is there any question that we may want to or even can go back to the way it was before? Let's hope we have the insight and the courage to find the answer to this question and to 'do-the-right-thing' in this matter.

    March 6, 2009 at 3:57 pm |
  18. Alice

    I was in a church praying for a change. I think Maggie here is questioning how low can you go? Where is the lowest level, stock market is staying alive. I'm quite sure everyone can figure out what does it mean, when 50% of stock market companies are thrown out of yearly deficit game. Quite a same when we employees are in a crash course with our executives. The combination of employees and directors and hype of "occupation of a building" in economic is in crash course.
    It will be engrossing to read that the small and medium businesses could save one quarter of stock market; but will the consumers have their trust? That is a huge question.
    I heard some executives arguing that the newspapers and the expressionist columnists have spoiled the critical economic information to make right choices.

    March 8, 2009 at 9:19 pm |
  19. 2-th-max

    I have a simple plan to help our great country pull itself out of the economic downturn.

    Allow all United States corporations who develop a new invention or a significant innovation of an existing product to pay no federal corporate tax on these inventions/innovations for ten years. Congress could easily place definitions and parameters on which corporations would qualify. Such a plan would spur new inventions/innovations in all sectors and recruit new corporations to the US. Unemployment numbers would decline, payroll taxes would increase, and trade deficits would improve. The American workforce remains one of the most productive in the world. Our government needs to help them stay on the job, not by supporting failed business models, by encouraging new business growth and expansion.

    March 9, 2009 at 1:21 am |
  20. dan in Tucson

    I have a story which hits upon the current economic time.
    Last week I applied for a car loan directly to my bank (WF) for a $17K electric car in which I am putting down 50% cash deposit. I pay all my bills on time, have my savings, checking, and mortgage with them. They flat out refused me with a bogus claim of 'too many delinquent debts'. This response shocked me so I did a credit report which showed no such thing. When I confronted them, they changed their story giving me the new excuse, we are not lending money for non-franchised cars. Lets face it, banks aren't loaning money and are getting worse.
    I do my part by paying all my bills on time and even helping the environment by buying an electric car. So how come I am getting stonewalled? By the way, I am pulling all my money out of the banks. If they are putting such a tight grip on their money, so will I. I suggest everyone else do the same, then maybe they will do something.

    March 9, 2009 at 3:19 pm |
  21. Jimi Thomas-Douglas

    Retirement?!?! Who needs retirement these days?

    I’ve decided to take up smoking: not only do I look cool doing it, because of cancer I won’t have to worry about retirement.

    And buying cigarettes will help stimulate the economy, from the gas stations, to the truck drivers, to the farmers to the doctors who will treat my inevitable cancer!

    I don’t expect a thank you, but I will accept one.

    March 9, 2009 at 9:51 pm |
  22. Bert

    There is no problem. All you need is a big polluter (like Tyson) to help Hillary (aka HilBillary) turn $1,000 into 100,000. Then all you need is HillBillary to take her Illinois (aka Blagoyevich) roots through Arkansas to Long Island (aka $6,000,000 home ). Then with the help of Jefferson (aka WJC) and $20,000,000 from a Canadian miner, the HilBillary Foundation (now worth $500,000,000) will help the Chinese Government by not bringing up dissident abuse (like Guantanamo????????)-oh wait a minute the Wahington Post can't find Beijing when HilBillary wants to keep the Chinese buying US Treasury Notes. The POST and the TIMES are always out there helping the regular guy by helping them buy $6,000,000 homes on Long Island. They also help the average gal by not reporting that she doesn't have to pay 39% income tax rates on her hedge fund earnings because she is REALLY interested in helping the underprivileged-even though people who don't have LONG ISLAND or BLAGOYEVICH connections have to pay taxes (without the help of the polluter TYSONS). No problem the LONG ISLANDERS (aka friends of HilBillary) are protecting us-don't worry about hte war that HilBillary gets us into-the Europeans will be RIGHT behind us.

    March 10, 2009 at 4:39 am |
  23. Michael Levinson

    To me it seems so simple. But we keep looking towards returning to our old jobs. We have to get off that track and start new corporations from the ground up using all the various skill sets that have been laid off during this down turn in the economy. We can start this by networking at job fairs like the one in New York, etc. Money? Maybe we can get help from those various agencies that are throwing good money after bad.

    March 11, 2009 at 12:26 pm |
  24. jayne Byer

    I lost most of my money in stocks. I had a relative in the stock market who convinced me to invest. I would have been satisfied with the lowest risk CD accounts. I will never invest in the stock market. It's always been a risky venture and now I dont trust any of it. If one can afford to lose money- it's like gambling, then do so. Also one thinks investors look out for their clients' interest- or give them options when the stocks are tanking- that just didn't happen– esp when the writing was on the wall in 2007. Profits, baby, profits and blind faith in their company who brainwashed them into thinking things will come back to normal when politics change. ha!

    March 12, 2009 at 11:24 pm |
  25. Michael (Retired Marine)

    I HAVE THREE QUESTIONS:

    1. With the economy so bad why doesn’t the Federal Government put a Sales Tax on the sale of every stock sold every time it is sold? I could be at the same percent as the interest on the National Debt. This is more volatile than Social Security. We pay tax on our homes (our biggest investment). Investing is a Luxury.

    2. Why is the government covering up, with the News Media’s help, who made the $500 Billion dolor, run on the Banking System last September? They are afraid that we will find out it was an Arab Consortium or the Chinese.

    3. Why aren’t you accusing the Banks and Mortgage Companies of being bigger crooks than Barney Madoff? They caused the loss of Millions of people’s investments in their homes and they got money from the government and still want us to pay them for the value we lost in our home investment.

    March 13, 2009 at 4:42 pm |
  26. Allison

    When are people going to stand up and refused to be scared into hiding under their beds with their money? I did on Monday last week and I feel great. If we are going to allow ourselves to cowed by a bad market, then we should just stick all of our money in the mattress and quit talking about it. With major stocks in the basement, I say now is the time to spend that little bit extra that we find and get back into the market. We all know it will rebound one day, so the real question is when it does are you going to be grateful that you stood up and took the risk or resentful that you didn't have the courage?

    March 14, 2009 at 2:30 pm |
  27. Linda Lawrence

    In the 80's or 90's, yes you would buy stock. But!!! not now!!!! For one thing, all the manufacturing companies have moved over-seas. Those stocks are gone and will not return.

    When you buy stock, you expect the company to grow, the ceo's to put the money back into the business, not steal it or give each other millions of dollars.

    No companies to grow, plus, day trading. They skim off the profits as they become available.

    The United States govenment sold the country out. It is gone. The good old Bushs, and Clinton with his NAFTA.

    That's all folks!!!!!!!

    March 14, 2009 at 11:06 pm |
  28. LE Manley

    I agree with Miroslava, I believe that we need to start finding our own way through these troubled times and start with entrepreneurship. We need to learn how to stand on our own 2 feet and stop relying on what have gotten us here. There is noway to expect change without change of our own thoughts first.

    Check out Planetmogul.com, it may be the answer that some of us are actually looking for.

    March 16, 2009 at 6:04 pm |
  29. Pavel

    I hope that people like Mr. Premo Sewnunan. are not employed in capacity to instigate their views into the life of us, ordinary people because that would be a real disaster – we all would end up like "A lost generation?" And Mr Thomas? The one who tells me/us that I am in the driver seat? I just hope there is no one on this planet who believes in revelation(s) of this kind. My recommendation for these two gentlemen is to read comments of Mr. Robert J Marchello, Emmanuel Decarpentrie, and lajide2003

    March 19, 2009 at 4:39 am |
  30. Frank

    Being sold a Bill Of Goods twice

    I used to place (invest sounds to sosphisticated) my money in the stock market counting that the rules of supply and demmand and the work of some smart people could make it grow more than I ever could.

    Now I was sold a Bill of Goods when my money went in to stop the down spiral of the financial sector and be thankful that I just lost 50% of my net worth.

    Now i am being told to buy stocks as the Government is willing to invest 1 trillion dollars in acid assets.

    This means that in order for me to recuperate my 50% loss, I will have to put more of my money (government) to buy these assets. So I ask, when my stocks go up will it be just my same money coming back to me??

    March 24, 2009 at 3:48 am |
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