Investing Nightmare
by Albert DiBartolomeo

They told us to invest in the stock market because equities were the only vehicle where we could earn returns on our money higher than the interest rates offered on savings accounts, CDs, and bonds.  They told us it was the best way to protect our proverbial nest egg from inflation.

But to be sure of what they told us, we did our homework.   We were not doddering fools listening to cons on the telephone doing their best to defraud us.  We weren't stupid.  We weren't incautious.  We weren't greedy or looking to make a killing.  What they told us seemed reasonable.  We invested, and we were glad that we did.  Until recently.
When the bad news began and the market began its steady plummet, we still listened to them as they told us that the "fluctuations" were understandable, that to panic and sell into a bear market would be a mistake.  We accepted the mantra that the market plunges were nothing new, that the movements had little connection to the "real" economy.  We consulted the conveniently available information and were satisfied that what it told us made sense.

So we hung on to our stocks and our mutual funds even while we watched their value relentlessly and sometimes dramatically shrink.  They told us to stay the course.  Don't panic.  In fact, they told us, there were bargains to be had—stocks were cheap!  We could find no consensus otherwise, just some solitary voices shouting in the wind, something about mortgaged-backed securities, option-ARM and NINA loans, credit default swaps, SIVs, CDOs.

But the bad news kept coming, some of it plain astonishing news, and with it we began to hear an unease creep into their voices.   The market plunged, tested the bottom, plunged again.  The notion that all of this was only part of a dynamic financial market that had weathered all kinds of storms, even the Great Depression, began to give way to bafflement.  After all, stocks of supposedly high caliber that just six months ago traded above $40 a share were now in the low single digits, companies that were "too big to fail" were rescued by the Treasury and not long later, still too big to fail, were rescued again. 

Even after all of this, we didn't sell our equities; we even continued to invest, albeit more nervously, because we didn't want to be caught on the sidelines while the market stoked its coals for the bull market to come, which they told us was certain, only a matter of time.
We did not stop investing until we began to suspect that they did not understand what they were seeing in the financial system, did not grasp the magnitude of the trouble, and seemed less than capable of dealing with it.  It was as though some strange, inscrutable, seemingly amorphous life form, half hidden in shadow or completely out of sight, even to CEOs whose companies had helped create it in front of the averted eyes of their governments, had been unleashed into the US and world financial markets and could not be corralled by anyone in a position to do so.  We knew the standard risks of investing, but we did not know, nor could hardly imagine, the zeal and abandon with which the dangerous investment practices that came to light had been undertaken.

After a time, we were able to see enough of what we needed to see, but the particulars hardly mattered anymore; they were just the spots on the beast in whose jaws we found ourselves.  Nor did it matter that we, common people who had placed our faith in the financial system, of which the stock market is the central part, and in those who operated in it, felt as though we had been treated like fools.  It has become too late to sell, something they also told us, and we now have to be content with sitting tight on our drastically reduced portfolios while hoping that the market will ascend some time before we become too old to work.