Ask a CFP: Where is the market going?

by Kristina on September 4, 2014 · 4 comments

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Good morning Dinks.  If I had a dollar for every single time someone asked me this question I would be a very rich lady.  The question is so random and absolutely unpredictable.  It’s like asking someone what do you think the weather will be like tomorrow?  The truth is no one knows, not even the weather man.  Just like he can’t tell you if it’s going to be sunny, I as a financial planner can’t tell you what the market is going to do.

The market as the new safe topic

It is said that people should never discuss politics or religion at work or at a dinner party.  I believe the reason is because these are two subjects that seem to bring out very strong opinions from people.  So when a group of new friends get together for the first time it’s a good idea to stay away from controversial topics.

Does this mean the market is a safe topic?  Did I just use the words market and safe in the same sentence?  I believe the answer is yes.  Safe topics in public forums include topics where the majority rules and I honestly believe the majority of people like to talk about the stock market.  People agree that the stock market is unpredictable and they love to talk about it.

It’s not the first time, so what’s the big deal?

Yes I said it.  I know some people think the market crash was just a normal downturn in a regular market cycle, however it was more than that.  Investment professionals love to compare the recent market crash to the great depression but that’s not a fair comparison.  Why?  Because the people who are building their wealth now don’t remember or weren’t alive during the great depression.

This is the second major drop I have lived through (or should I say remember) during my lifetime.  We saw the market decline in 2000-2001 after the millennium and now we saw the decline in 2008.  As a financial services employee I can tell you that the market crash of 2008 changed the way banks think about money and it changed the way people think about banks.

The market crash forever changed our mindset

The market crash of 2008 has forever changed the way people think about money, not just the bottom line and dollar signs but the fear and emotions that come with investing.  People are generally afraid to put their money back into the market for fear of losing more money.

The market crash also changed the way that banks think about money and clients.  The focus of banks has always been the bottom line, I’m not denying it.  Thanks to the credit crisis several banks took major losses on their books.  This created a shift in banking culture from customer service to selling products.

Has your investment philosophy changed since the market crash?

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{ 3 comments… read them below or add one }

1 Stefanie @ The Broke and Beautiful Life September 4, 2014 at 8:58 am

I graduated the year of the market crash and started investing just after, so for me, it was horrible timing employment wise, but awesome timing investment wise.

2 Kayla @ Red Debted Stepchild September 4, 2014 at 11:51 am

I graduated high school in 2009, so it was a worry-some time to be putting so much money into education when there were not a lot of jobs available, but on the other hand, because there were no jobs I might as well go to school right?! I’m glad things have gotten (somewhat) better since then, but yes I think people’s views as a whole have changed because of the market crash.

3 Deb @ Saving the Crumbs September 4, 2014 at 1:02 pm

Well, like Warren Buffett says, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.” I’d say he’s lived through a few market crashes so his advice to look long-term should hold a bit of water. :-)

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