A quiet week on Wall Street?
If you had been living under a rock this week, you might look at the Friday’s close in the stock market and figure we had a quiet week.
The broad S&P 500 index on Friday closed at 1,255, almost exactly what it was last Friday, 1,252. That’s a mere 0.2 percent difference.
But for those living above the rock, it’s been a much different story.
It started on Monday with legendary Lehman Brothers investment bank going under, insurance behemoth AIG on the brink of bankruptcy, Merrill Lynch brokerage desperately selling itself to a bank.
And by Friday, we had the largest bailout of Wall Street in American history.
Quiet week, indeed.
What if you were one of those investors who couldn’t stomach the gyrations and got out of stocks on Wednesday? Yanking out $100,000 from the S&P 500 would have cost you more than $8,500.
Now, that could end up being a good move. But trying to time the market is a fool’s game. Again, if you’re well diversified and your investments had a purpose in good times, they’re appropriate for bad times too.
It could also be a good move if this week has taught you that you don’t have the high risk tolerance you thought you had. That too would be a reason to gradually reduce risk in your investments. You want to be able to sleep at night.
The smartest move is what most people probably did this week. Nothing.
