Good morning. This is Jason Hartman with the Speed of Money. Wow, what a week it has been for the financial markets. A week ago Sunday, we had the Federal bailout of Fannie Mae and Freddie Mac. The next day, the DOW rose almost 300 points and then it fell about 300 points.
I often wonder if stock investors, or should I say gamblers, are just big adrenaline junkies. A couple days ago, we had the bankruptcy filing of Lehman Brothers Holdings, a 158-year-old company, and what did the markets do? It dropped nearly 5 percent in just one day.
So many people ask me which way it is going to go next and is it the end of these wild swings. I wish I could provide some comfort, but unfortunately, I believe that the turmoil will continue for some time to come.
Stocks are bought and sold based on their perceived value at any moment in time and the buyer’s expectations of a price change. The perceived value changes from day to day and unlike a physical object or a commodity, the stock is only worth what someone will pay for it. Because a share of stock is a fiat currency, like the dollar, it has no intrinsic value in and of itself and it can drop in value by 60 percent in a single day, quite easily. The emperor really does have no clothes.
This is why I like real assets, like income properties, which have universal demand. Are there more companies selling on various stock exchanges that could be worthless tomorrow? My opinion is an absolute yes. I don’t think we’ve seen the end of this decline as the crimes of Wall Street are exposed. Your family’s investments are too important to play the “today you’re up and tomorrow you’re down” game. If the stock market was a hurricane, the weather center would call it a Category 5.
It is my recommendation that you stay safe and far away by investing in real assets, like income properties, which have universal demand.
Until next week, visit www.jasonhartman.com. This is Jason Hartman for the Speed of Money on 790 KABC.
For even more in-depth information, tune in to Jason Hartman’s Creating Wealth podcast. Jason shares his unique investment strategy and shows you how to create and maintain wealth in these uncertain times. Head to www.jasonhartman.com and click on Podcasts. Or simply search for Jason Hartman at the iTunes Music Store. Subscribe today to the Creating Wealth podcast at www.jasonhartman.com.
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Duration: 3 minutes