Friday, March 09, 2007

Are you scared yet?

Apparently, you should be. I was getting the oil changed in my car the other day, sitting in the lobby of Jiffy Lube waiting for them to finish with the car. Completely off topic, but bear with me for a minute, someone ahead of me went to the counter to pay and asked the luber if he could use a student or AAA discount, and the luber said he could use one or the other, but not both. And I thought, "WHAT?! They accept AAA discounts?"

So when it was my turn to pay, I asked about the AAA discount, showed them my card, and got 10% off the order. Remember that the next time you get your oil changed. I had no idea they accepted it--it's certainly not a discount they tell everyone about.

But back to the subject at hand--they had CNN running on the television and one of the reporters that covers Wall Street was talking about how "scary" last week was (or was it the week before that?) when the market dropped over 400 points in one day. The exact quote I might have wrong, but I think it was something like this: "It was very scary," and she nodded with a somber look.

I own stocks. Most of my money, in fact, is tied up in the stock market, but you know what? I wasn't scared. In fact, I didn't even know about the 'blood bath' until after the music had stopped when I was talking on the phone and Amanda mentioned that the market dropped over 400 points that day. My reaction was to raise an eyebrow. Not necessarily because the stock market dropped over 400 points, but rather I was surprised that Amanda would know it. She doesn't usually keep up with that sort of information. =)

I'll admit, the stock market doesn't drop 400 points in a day every day, but it was what? About a 2 or 3% drop? Not exactly something that would ruffle my feathers. I expect stocks to drop 2 or 3% on a regular basis. Heck, I expect stocks will often drop 10 to 20% over periods of time--maybe even more when times really get rough. And they think a less than 3% drop is "scary"? No, I don't think so.

If you think a 2 or 3% drop in the stock market is scary, you should not have put money into the stock market in the first place. This doesn't even rank as one of the 10 biggest drops in stock market history. As far as I'm considered, it's a complete and absolute non-event. Not even newsworthy.

But you know, they have to fill all that air time with something, so they call a 400-point drop scary. It sells paper. It keeps people glued to the television. People wring their hands in fear and frustration. But it's much ado about nothing. Don't fall for the hype.

And heaven forbid, do NOT invest in the stock market if a 2 or 3% drop scares you. That's just stupid, because it WILL happen to you if you're in it long enough.