Ludicrous Advice

Dear Dave, My dad has been reading a book, and the author says the stock market is about to crash. He's scared my dad to death, and now he wants to pull out all the money from his 401(k) and other investments and buy gold overseas. What can I say to talk some sense into him? Amanda Dear Amanda, I've seen books like this every year since I was old enough to read. This is ridiculous! COULD the stock market crash? Sure, but there is absolutely no realistic indication of that happening. In order for the stock market to crash all the giant companies like Microsoft, Ford, GM and GE would have to blink out of existence. I'm not talking about lower earnings and economic slow downs, I'm talking about closing their doors and going out of business completely. Can you honestly imagine this happening? Our stock market and banking systems are structured and operate much differently than they did before the Great Depression. There are many more safeguards in place. When President Nixon resigned the stock market dropped almost the same exact percentage it did back in 1929. There was no depression. Fifty-six days after the attacks on 9/11 the market was back up to the level it was on September 10. Did it drop for a while? Of course, it did. But the people who run around spouting this end of the world kind of stuff are doomsayers trying to make a buck off people's fear. I don't own any gold, and I'm not buying any gold. The returns are horrible - only about four percent over the last 50 years - and the volatility is all over the place. Next to gold, the stock market looks like a cake walk! Dave
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