The news articles noting that the stock market is flirting with bear market levels reminded me of previous comments that I made on the investment advice that I saw on my local Fox affiliate back in January and also in November. The investment advisers told people to hold their stock and just let the market ride out the downturn. Of course, anyone who had sold back then could buy into the market today and be almost 20 percent richer. Did we know that the market would fall at the time? Well, we can never know the timing of the market for certain. Even if we had a perfect chart of what the economy will do over some future period of time, we can't know that some moron with access to hundreds of billions of dollar will not buy hugely overpriced stock and keep its price from falling, but we can have some basis for our assessments of the market. Last fall there was good reason to believe that the market would drop from what have since turned out to be peak levels, because the vast majority of economists were still insisting that housing meltdown was not a big deal. Those of us who recognized the seriousness of the loss of close to $5 trillion in housing bubble wealth (and rising) thought it likely that these losses would be a serious hit to the economy and corporate profits, and presumably also to the stock market. It would have been appropriate for Fox , as well as other media outlets wishing to present investment advice, to seek out divergent views. Those who listened to the Fox experts have just lost much of their retirement savings.
--Dean Baker
