Reading reaction journal 4

Reading reaction journal 4

Reference:

Updegrave, W. (2010, April 15). In tough rimes, don’t give up on stocks. CNN.com. Retrieved April 26, 2010 from

http://money.cnn.com/2010/04/15/pf/expert/stock_bonds_funds.moneymag/index.htm

Summary:

In the article I read, since two years ago many people look for excuses to hide their financial crisis. Their thought is to not touch stocks or fund of stock because a lot of banks were bankrupt in that year. The economy was on the verge of a meltdown. At that time, many people lost their money in stocks. In fact, stock had a run up of 70%. This leads people to believe that another trouble is going to start. Someone asked an expert a question regarding this matter. The expert answered the question and commented that it is not recommended to give up on stock funds. A lot of people almost change their invest form stock funds to bond funds because of money loss, making people feel uneasy. An important thing to note is how you should handle your investment in times of turbulence within the financial market.


Reaction:

A lot of people lost their money in the stock market two years ago because they believed that the stock would increase even more. Hence, they invested a lot of money on the stock market, but the result is uncontrollable, and they lost a lot of money, including myself. The financial crisis came in soon after stock run up to top. Therefore, this experience tend to make a lot of people feel uneasy because stock run up above 70% in March 2009. People worry that the stock market will go down again. The situation is like two years ago. Many people want to change their stock funds to bond funds because bond funds are much more safe than stock funds. Although bond funds are able to help you to save your money during financial crisis, but the interest is low. If you have some plans to save your money for your retirement, I would not recommend saving money in bond funds. You have to decide on an investment plan or look for someone to help you to decide.
I personally tend to invest in high risk investments when the stock market is in a bad shape because I believe that it would bring in higher return. However, professionals in this field would not approve of such a strategy because the risk is far too high. I would dabble in high risk investment in my country, Taiwan, but I would not do so in the U.S. This is possibly because I am more familiar with the Taiwan stock market than I am with the U.S stock market.
According to the article I read, we have to handle the financial market in times of turbulence, and to not guess oil crisis or financial crisis because a lot of companies still made money during the financial crisis and oil crisis but, a lot of companies were still in a state of bankruptcy when the economy was stable.