Wall Street Roller Coaster Ride Continues

To me, nothing is more fun when visiting an amusement park than a big roller coaster. However, investing in US stocks has also had that same feeling recently and unless you are a futures or options trader, the present volatility of the US stock market will most likely make you sick to your stomach. Today, stock prices are sharply higher, but no one knows what will happen tomorrow because with an never ending supply of bad news about the US economy, the stock market could turn around and trade sharply lower tomorrow. Most Americans are invested in the US stock market in one way for another.

From individual investors that use a traditional broker to people that use services like Etrade to people that own shares in a mutual fund, millions of Americans financial future is tied directly to the success or failure of the US stock market. That is why the current roller coaster ride in US stock prices is driving so many Americans nuts. Frankly, many people I have talked to lately are scared to death that the US stock market will crash the way it did back during the Great Depression. While I do not think that will happen, I do think this current roller coaster ride in US stock prices is likely to continue for awhile longer.

Making matters worse, for some Americans, is the stark reality that the book value of their home has either stayed the same over the past year or in some areas it has dropped. When falling homes prices are added to an already dysfunctional stock market, some Americans are in fear of what would happen if both their home equity and stock market investments ended up in the cellar at the same time? That financial fear could become a reality for some as the US nears a recession later this year. For millions of young people, they have never witnessed first hand the financial terror of a severe recession.

The only positive aspect of a recession is to teach young people that while it is fun to watch ones investments go up year after year, there is a downside to the US economy that can be very painful when a recession sets in for a long haul. Recessions have a way of balancing out young investors by showing them that the sky is not always the limit when it comes to investing in the stock market or in real estate. Older Americans have seen many recessions in their lifetime and the smart ones always come up with a plan to better weather the next recession when it comes along. Both real estate and long term stock investment is a proven way to achieve long term financial success, but in the short run they can burn people that have not been invested over the course of several decades.