Currency Concerns

Market Charts

I’m worried about the economy. For a while, it seemed like everything was going up--now it seems like everything is going down! I talked to my parents about it, and they say they still have money in stocks. I want them to pull that money out, though, so that they don’t lose big when the market goes down. It seems like we’re on the edge of a big market collapse. Look at Bitcoin: everyone overreacted and sent it way up, and then it crashed down again, right? Couldn’t the Bitcoin bubble cause a market drop? Experts, can you tell me what’s going on and whether I should keep trying to convince my parents to get out of the market?

The economy is a complicated thing with a lot of moving parts. It’s certainly possible that you’re right about the market being due for a big correction--but it’s also possible that you’re wrong, and that getting out of the market now would only cause your parents to miss out on money. And if they were to buy back in after that, perhaps they’d arrive just in time to experience a downturn then--ultimately losing much more money than they otherwise would, thanks to their attempts to “time the market.”

Studies show that attempts to time or “beat” the market usually go wrong, even for professional investors. Your parents seem to be adopting a popular investment strategy: save consistently and invest broadly, without trying to time the market. A market downturn may not be pleasant, but they’re counting on the market going up in the long term, not the short term.

Besides, it’s not at all clear that the market is going to keep falling. It’s true enough that Bitcoin has been a wild ride, according to cryptocurrency price trackers like Buy BlockChain, but that’s to be expected in such a volatile investment--and many experts still believe in Bitcoin long-term. And Bitcoin’s influence on the economy is almost certainly not great enough to cause a massive collapse, anyway.

And many of our economy’s underlying indicators still look good, experts say. You can find pros that are saying we’re headed for a downturn, as well as plenty who feel the other way, and this kind of disagreement is far from atypical. Some prognosticators have better track records than others, but uncertainty about the economy’s future is a constant in finance: you will always be able to find experts warning of a crash (and others insisting we’re headed for glory days).

In short, it’s probably not the best use of your time to fret about the economy and your parents’ investments. We might be headed for a downturn, and we might not; but with a constant saving and investment strategy, your parents should be okay either way.

“Eventually we all have to accept full and total responsibility for our actions, everything we have done, and have not done.” -- Hubert Selby, Jr.

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