Turning Dollars Into Sense: Stock Tips
Q: When will the market crash?
A: The day after you invest in it.
Until the day you invest the market will continue to
rise. You will open the paper every morning to see the Dow-Jones
has struck another unprecedented high. You will tell yourself
if you had invested your money in stocks instead of your education,
you could have bought your college by now. But you didn't.
Someone else did. You bought a $100,000 piece of paper that
says, perhaps in Latin, "I spent four years reading Greek philosophy
and all I got was this lousy piece of paper." Meanwhile the
guys who bought computer stocks in the early nineties have single-handedly
driven up inflation, ensuring you will never pay off your senior year
student loans. In the boxing match of life you have already
lost round one.
Q: Am I the only person in the U.S. who hasn't bought stocks?
A: No, many Americans still have not invested in the stock market. These are mainly cave-dwelling Americans and Americans under seven.
Q: As a non-investor, how will this effect my life?
A: As an increasing number of average citizens invest, the stock market will take up more and more time on the nightly news until important stories such as details of the Clippers game and Sarah Michelle Gellar's vacation to the Bahamas are completely brushed aside. Whether the market goes up or down the news will continue to feature interviews with leading economists who repeat the same thing: We have several more years of an 'up' trend.
Realistically speaking, they say, the market won't reach a level analogous to its actual worth until the Dow hits 216,000 or Alan Greenspan dies, whichever comes first. This relaxes just about everyone, with the possible exception of Alan Greenspan, who doesn't appreciate that the entire world thinks he is a raving worrywart, raining on our parade because he sold his Microsoft shares after Black Monday.
You've read a hundred different stories about two guys who thought up an Internet company in their dorm room freshman year and are now worth two-hundred million dollars in stocks, but have you heard the story about Michael Tran?
Two years ago Michael was a twenty-two year-old entry-level employee at computer consulting company. Though he was a college graduate, he made close to minimum wage. He decided to use his brand new credit card÷with an APR of 3.9% for the first six month÷to invest eight-thousand dollars in the stock market.
A month later the Asian markets dropped. Michael's stock plummeted. He sold. He is now a twenty-four year-old entry-level employee who happens to be four-thousand dollars in debt. "The trick is to not get emotional," Michael says. "If I had held onto my stocks, they would have tripled by now." The bad experience has not pulled him away from the thrill of the market. He still is looking for a good investment. "I just bought stock in a company called Play-by-Play," he explains, "They have the rights to Pokemon, which is really big with the kids outside the U.S., and it's catching on here. A couple of weeks ago their stock was at a dollar. Now it's at six."
Did Michael sextuple his investment?
"No," he says, "I bought it at seven."