The stock market historically, has had good times (stocks rising), and bad times (stock values reducing). Most investors look at only the daily moves of the market and are happy on the days when the market is rising, but panic when the market performs poorly. We need to look at the big picture. Looking at the market over many years, shows us that the market will continue to make the investor money.
Starting in the early 1950's when the Korean War armistice was signed the market was rising, and the Dow Jones Industrial Average closed above 1,929 points for the first time. Stocks continued rising, and leveled off at the time that Sputnik was launched. A short time after Sputnik's launch, stocks fell a bit. From this point the market continued its rise with slight pullbacks on its climb entering the 1960's to the date of John F. Kennedy's assassination, and as terrible as that was to the nation, the market continued marching upward.
At about the mid 1960's the market started moving sideways, not gaining or losing, followed by a slight drop in stocks. After this pullback the market continued higher to the time that the news announced, Martin Luther King Jr. had been assassinated, the year was 1968. At this time the market continued skyward, with slight pullbacks, but as the end of the 1960's approached and the U.S. astronauts landed on the moon, the market was making a big correction (falling) till the beginning of the 1970's.
The early 1970's was a time investors were seeing their investments growing as the market rose, once again. The stock market continued to rise, with normal pullbacks as investors took profits (sold stocks). As always when stock prices fell, more investors would buy stocks (like buying them on sale), and the market would continued to climb. At about 1972 the market started another correction, and was headed lower.
Then in 1973 we had the Arab Oil Crises. In October, 1973, panic gripped the United States. The crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Remember the long lines of cars at gas stations waiting to buy gas. It got so bad, that the day you could buy gas was dependent on your car's license number. Even or odd days. If the last number on your license was even, then only even days on the calendar would by your day to get gas.
During this time the market continued to go lower and lower. At its lowest point on August 9, 1974 Nixon resigns. The market was now at its lowest point in 1974, but it remained higher than the lowest point of the 1960's.
Again the market picks itself up, and starts moving higher towards the ending months of the 1970's. Enter the Iranian hostage crisis. The Iran hostage crisis was a diplomatic crisis between Iran and the United States. Fifty-two US citizens were held hostage for 444 days from November 4, 1979 to January 20, 1981. The market made a slight drop, then began moving to higher levels again.
Now in the early 1980's the market continued to rally, moving higher till at about February, another pullback. During this time IBM introduced the first personal computer, as the market continues lower. This pullback at its lowest, remained very much higher than the lowest point of 1970.
The market again picks itself up, and continues its climb upward, to the time that the Space Shuttle Challenger's smoke plume, after launch in-flight breakup, killed all seven STS-51-L crew members. Even with this disaster the market continued higher to 'Black Monday',
On October 19, 1987, Black Monday was when the New York Stock Exchange (NYSE) experienced a dramatic sell-off, in which most of the stocks listed on the exchange lost a great deal of their value. Many people panicked, seeing a rapid loss of their money. President Ronald Reagan announced that he was puzzled by the financial events, as nothing was wrong with the economy. He urged Americans not to panic. A short time later the market began moving higher as if nothing had happened. Then the next crises.
In the early part of the 1990's we had the Iraqi Invasion of Kuwait. The Invasion of Kuwait, known as the Iraq-Kuwait War, was a major conflict between the Republic of Iraq and the State of Kuwait, which resulted in the seven-month long Iraqi occupation of Kuwait, which subsequently led to direct military intervention by United States-led forces in the Gulf War.
On news of the invasion of Kuwait the stock market dropped from the highest point it had risen to. The drop was of concern to investors, but in short order the market again continued its progress upward. The upward move continued when the World Trade Center was attacked with a truck bomb. The date of the bombing was February 26, 1993, but the market continued higher yet. Then news of the bombing in Oklahoma City, of the Alfred P. Murrah Federal Building in downtown Oklahoma City on April 19, 1995.
The market's move up continues unstopped into August 17, 1998, when the Russian Financial Crisis (also known as 'Ruble Crisis'). During the ensuing decline in world commodity prices, countries heavily dependent on the export of raw materials were among those most severely hit. After another dip here the market advanced higher again.
The market gained more altitude till the end of 1990. The "dot-com bubble" (or sometimes "IT bubble" or "TMT bubble") was a speculative bubble, covering roughly 1995–2000 (with a climax on March 10, 2000.
Very early in 2000 the market began its decline from the highest point it had ever been. The market was on a slide downward, continuing lower, but remaining much higher than previous lows. Finally the market regained traction, and again began its ascent.
As the market continued up we experienced the U.S. Invasion of Iraq, and continued rising higher and higher till arriving at our real estate bubble bursting point. This bubble was an economic bubble affecting many parts of the United States housing market. Home owners were defaulting on their loans, and with this the financial institutions were in a very poor position to continue existing.
When the housing market burst, the market dropped to its lowest point in recent time, but even at its lowest, the market only dropped a bit lower than it had been during the U.S. invasion of Iraq on March 31, 2008. Today the market is again working its way higher.
The market will always have its ups and downs, that's the tug of war between the bears and the bulls. When the market is down, people are skeptical, and worried. This is the time to be buying stocks when prices are low, to allow you to buy more (on sale). When stocks rise people are encouraged, and become excited because the market is doing well. It's at these times that stocks are more expensive to purchase, allowing you to buy less stocks with a given amount of money.
Consider keeping your emotions in check when making investing decisions. To learn more, and to get a good understanding of the stock market for creating wealth, visit us at http://www.youcontrolinvesting.com/ We are offering free to you, lesson 1 to get you started. Visit our site and request your free lesson 1, on our 'contact us page', or by email. Get the most current important information about the markets moves at www.Twitter.com/StockmktTeacher
Good investing,
Bruce Cortez
Saturday, November 6, 2010
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