What causes a riot?
For that matter, what specific act causes a stock market crash?
These thoughts could have come to many minds recently, as riots in England and falling stock prices everywhere brought questions.
Having been in London recently, and finding that the center of the initial riots was the Tottenham section of London, made us relieved to have been there prior to the unrest. We either ended or began trips, or changed lines, at the Tottenham Road Station several times. And we must admit, London seemed mighty peaceful, serene and pleasant when we were there earlier this July. It doesn’t take much projecting to realize that with riots going on in the city, you would certainly curtail and limit your wanderings.
Those riots initially began when someone was shot by a policeman. That might have triggered the initial riots, but for it to happen again, and in many other cities, makes you wonder if there is more unrest in the land than might first appear.
As to the stock market fall, this is a subject that really bugs me, a very small investor. Here’s why: the stock market gurus, including your local broker, continue to pound into the average investor’s heads that we ought to be investing for the long run, and we should not try to time the market and jump in and out.
For the most part, that’s what the individual investor does: buy and hold.
But the so-called gurus and the Wall Street so-called experts? When there is a hint of a stock market downturn, they dump stock immediately, taking no heed to the advice they give us. And first thing you know, other experts notice a guru doing this, figures he knows something they don’t, and begins to unload stock, too. Before the small investors realize it, the market is down dramatically, the gurus have protected themselves, and we are sitting high and dry. They do not take their own advice, and they, themselves, cause a stock market panic.
Now those of you who are invested in the stock market, think back a bit. Has it ever happened that when you sold a few hundred shares of a stock, have you caused a market panic? No. Even if you unloaded lots of stock, you and I can’t turn a market.
But fund managers, unloading hundred of thousands of shares, can they begin a run on the market? As one lady would say, “You betcha!”That’s what bugs me about the stock market. Average Americans find it difficult to save because of market gyrations. In the long, long run, it’s still best to buy and hold. But you must have the stomach for it.