(this was originally published 10/29/2019)
Pop Quiz
Can anyone tell me what today is?
October 29, 1929, is often taught in school as an example of what can happen when everyone is having too much fun and everything goes wrong.
That’s right- yesterday was the 90th anniversary of the stock market crash which brought the Roaring 20s to a halt and led to the Great Depression.
Some steps were taken to correct the errors of 90 years ago. Our bank accounts are insured for up to $100,000 and there is more oversight of stocks.
But, some of the contributing factors were not corrected. In fact, if anything, it may be worse now than 90 years ago.
Things are much more complicated than 90 years ago. There are many more investing options today. The dollar is no longer tied to the price of gold. And, after the market correction of 2008 showed us some of our weak areas, leading to bailouts of some major banks, some auto manufacturers, etc.
This is not to say that you should not invest in the stock market.
Just be aware that the stock market goes up and the stock market goes down. If you know you will need the money in the near future, move some of your stock investments to lower risk options.
Here are a few tips:
– only invest what you can afford to lose
– invest for the long-term
– buy stocks in companies you believe will last (snap test)
– diversify- both within the market and with non-stock investments
Over the last 100 years, the average annual rate of return on the stock market has been 10%. So, stay safe and enjoy the ride!
What are your experiences with the stock market? Please share in the comments!