Sick of those "we lost half our wealth in the market meltdown" commercials

[rob in cal]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that.  How many people really sold all their stock in Feb or early March of 2009?  This is the ultimate worst case scenario story that applies to hardly anybody, and it creates  a false sense of true market investing dynamics.

[forummm]

Are you suggesting that advertisements should start being honest? Isn't the point of most ads to trick people into buying their product?

[MrMoogle]

Are you suggesting that advertisements should start being honest? Isn't the point of most ads to trick people into buying their product?

Also, because of the housing crash, some people did lose half their net worth.
Before the crash, say you have 100k left on your mortgage, and the current value is 300k, your networth is 200k.
Now after the crash, the house is worth 200k, your networth is now 100k.
Good bye 50%!

[k9]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that.  How many people really sold all their stock in Feb or early March of 2009?  This is the ultimate worst case scenario story that applies to hardly anybody, and it creates  a false sense of true market investing dynamics.

Well, everybody says "don't sell your stocks during a market crash; just wait, and you'll be fine". That's true. But the very definition of a market crash is "a moment when a majority of investors panic and sell their stocks".

Don't forget a stock index is a representation of the average investor (that's even the theory behind index investing: don't try to beat the averages). So, it looks like the average investor lost half his money invested in stocks in 2008.

[SwordGuy]

Well, everybody says "don't sell your stocks during a market crash; just wait, and you'll be fine". That's true. But the very definition of a market crash is "a moment when a majority of investors panic and sell their stocks".

Agreed about the definition.  But not about the "everybody says" comment.  The small subset of people who read a lot of personal finance blogs say so.   Everybody else says "Sell! Now!".

Don't forget a stock index is a representation of the average investor (that's even the theory behind index investing: don't try to beat the averages). So, it looks like the average investor lost half his money invested in stocks in 2008.

No, the stock index is a representation of what investors think the stock is worth at a given moment in time.

It is NOT the same as the profits earned by an average investor, because that is based upon when they bought and sold (and at what price).   Example:  I remember reading about a fund that had had really good market appreciation over a 10 or 15 year period, but most of the investors in it had lost money.  That's because although the stock value went up over time, the majority had panicked and sold at the wrong times.

[k9]

Don't forget a stock index is a representation of the average investor (that's even the theory behind index investing: don't try to beat the averages). So, it looks like the average investor lost half his money invested in stocks in 2008.

No, the stock index is a representation of what investors think the stock is worth at a given moment in time.

It is NOT the same as the profits earned by an average investor, because that is based upon when they bought and sold (and at what price).   Example:  I remember reading about a fund that had had really good market appreciation over a 10 or 15 year period, but most of the investors in it had lost money.  That's because although the stock value went up over time, the majority had panicked and sold at the wrong times.

Uh, I think our disagreement is on the difference between "average" and "median". I might have chosen the wrong term.

[Eludia]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that.  How many people really sold all their stock in Feb or early March of 2009?  This is the ultimate worst case scenario story that applies to hardly anybody, and it creates  a false sense of true market investing dynamics.

I live in Florida and listen to a lot of AM talk/sports/financial radio when driving.  Basically every other commercial is some investment guy telling you how he can help you avoid the dangers of the market and that everything is about to crash... unless you join his club or become his client.  Its not just one guy either, there are dozens of these things, all day long.  Clearly going after the older population here that is afraid to lose anything. 

 

[Mighty-Dollar]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that

Exactly! It's a strawman argument. If you lost half of your wealth then you were loaded up on stocks. You failed to diversify into bonds. End of story. No need for an annuity. No need for Ken Moraif's market timing asset management. No need for Doug Andrew's index universal life. Just diversify and you're fine.

[MrMoogle]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that

Exactly! It's a strawman argument. If you lost half of your wealth then you were loaded up on stocks. You failed to diversify into bonds. End of story. No need for an annuity. No need for Ken Moraif's market timing asset management. No need for Doug Andrew's index universal life. Just diversify and you're fine.

You don't want to be 72% bonds though, you want to be 75% stocks.

[acroy]

Fear sells... which is why those commercials work.
Seriously, look with a critical eye at any ad. A lot of it is fear-based.

[Spitfire]

I live in Florida and listen to a lot of AM talk/sports/financial radio when driving.  Basically every other commercial is some investment guy telling you how he can help you avoid the dangers of the market and that everything is about to crash... unless you join his club or become his client.  Its not just one guy either, there are dozens of these things, all day long.  Clearly going after the older population here that is afraid to lose anything. 

 

Lol, are you talking about Rick Pertierra's capital protection group? Always hear him while listening to Joe Rose here is SFLA.

"7-8% gains with no risk." Sounds legit...

[fattest_foot]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that.  How many people really sold all their stock in Feb or early March of 2009?  This is the ultimate worst case scenario story that applies to hardly anybody, and it creates  a false sense of true market investing dynamics.

Well, everybody says "don't sell your stocks during a market crash; just wait, and you'll be fine". That's true. But the very definition of a market crash is "a moment when a majority of investors panic and sell their stocks".

Don't forget a stock index is a representation of the average investor (that's even the theory behind index investing: don't try to beat the averages). So, it looks like the average investor lost half his money invested in stocks in 2008.

In addition though, in order to "lose 50%" during the last recession, you would've had to invest your entire portfolio at the top and sell it all at the very bottom.

To do worse than that, you would've had to do the above, and then buy back in as it was going up again.

That's an incredibly unlikely series of events. I imagine most people probably lost something like 20-30%.

[mohawkbrah]

   I'm tired of hearing those "we lost half of our wealth in the market meltdown" of 2008 commercials on the radio, which are usually to encourage people to buy gold, or some commission heavy annuity or something like that

Exactly! It's a strawman argument. If you lost half of your wealth then you were loaded up on stocks. You failed to diversify into bonds. End of story. No need for an annuity. No need for Ken Moraif's market timing asset management. No need for Doug Andrew's index universal life. Just diversify and you're fine.

thats a whole lotta bonds