What's the point in investing in stocks the way the economy is now days?

Question

You have banks failing, the economy sucks ***, the jobs are c**p, so on.

You hear of wallstreet going bad, so why would people invest in stocks? What if a company just all of a sudden just goes bankrupt? Then the investor would lose everything.

Isnt this what the 401K plan is basically? Just stocks?

Answer 1

If it's that bad you should have shorted every financial and banking stock back in October.  You would have made a killing!!!!  Were close to a bottom in the markets, if your investing for the long term right now is the best time to buy.   But were still in a bear market don't forget that.  Buy the dips, sell the rallies.

Answer 2

If you sell short the wrong stocks then you will make a ton of money.

The lower they go the more money you make.

Answer 3

Actually, now is a good time to invest in stocks. I wouldn't put your life savings in one company, but when the economy is down and stock prices are low, you have the most potential for seeing growth in the upcoming years. In the short term, stocks may remain at low value, but in the long term, they will mostly likely increase in value, providing a high return on your investment.

Also, diversify your investment by investing in several companies, or putting money into a mutual fund that is diversified for you. That way, you are better protected against losing all of your money.

As for the 401K, it is not stocks at all. A 401K is a joint investment account set up between employees and their employers. The accounts usually allow employees to invest a portion of each check, and the employer will usually match that amount, or contribute a set amount  in addition to your investment. 401K's also sometimes include a profit sharing program.

-Paige

Answer 4

Why buy now? Because most folks would prefer to buy low and then sell high.

If you wait for everything to get better, you will pay a higher price.

Now, if a company goes bankrupt does the investor lose everything, probably. But as a novice investor you should not invest in stocks, consider  index funds accross several market segments.

Answer 5

If you feel that the economy will never rebound then there is no point in investing. We are doomed.

If on the other hand you think that the economy will eventually rebound this is the perfect time to invest.

Buy low. Sell high. That is the mantra of investing. Do you think you can buy low when everybody sees that the economy is buzzing along or do you think you can buy low when the economy is bottoming out.

Answer 6

The 401K is a tax differed retirement account and you can by stocks.

There are many companies and yes our economy is bad, but India and China are growing so there is a case for example Caterpillar or other companies that can sell products to those countries.

Since the dollar is down companies like Stryker make good money on the exchange rate with products made in the US.

Answer 7

If K-Mart was having this kind of sale, the parking lot would be jammed!  That's why to invest right now!!

Companies rarely "all of a sudden just go bankrupt".  An investor who's holding individual stocks, and who's keeping track, generally has plenty of warning that there's a problem.

And, no, the 401K system isn't "just stocks".  It puts retirement planning in the hands of individual investors, which has its own collection of hazards.

Answer 8

The point is that stock investing is for LONG TERM gain.  The best time to invest is in a "bear market."

Answer 9

I live for times like these! I've made more money investing in slow or down times than any other. As others have pointed out, when things are cheap that's when to buy. Of course this sounds good in theory but you have to be a knowledgable investor to know what and when to buy.

Smart investors never lose more than a pre set percentage amount on all investments. They put stop losses on their stocks to prevent losing more than set amount. They also take advantage of puts and calls on stocks to be profitable in down turns in the market.

Your right about the 401K's. They are groups of stocks managed by someone other than yourself. A really good investor would take advantage of matching funds from employers and not put anymore into 401K and manage the difference themselves. I would not recommend this to the majority of investors.

If it were not for bad times the good times would not be as sweet! It takes money to make money. Try to be prepared to take advantage of opportunity when it presents itself.