Thursday, December 11, 2008

Put your money under the mattress

From the 12/6/08 edition of The Economist

Any American who has diligently put $100 a month into a domestic equity mutual fund for the past ten years will find his pot worth less than he put into it; a European who did the same has lost a quarter of his money.

It is depressing that owners of capital cannot make money, even within a 10 year period.

The article also suggests a concept we should be teaching students. In times, such as these, we should buy, buy, buy! The Economist says,

If savers treated financial assets as they do other goods, they would sell them when they are expensive and buy them when they are cheap. Actually, they do the opposite.

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