Our savings take a pounding as the big boys panic sell -- again
Those of us seeking financial security and savings protection for ourselves and our families are being taken on another wild and largely unnecessary ride.
It seems fear has replaced rational thought at the big hedge funds, insurance companies, pension funds and other institutional investors that drive the world's stock markets.
We pack the kids off to school, head off to work, hunker down at the job and then the markets go berserk and our retirement plans and college funds take another beating.
Any disappointing economic report can now trigger panic selling on an epic scale.
On Thursday, for example, the Dow Jones Industrial Average fell more than 525 points before recovering to close down "just" 391 points for the day. All of the major indexes lost more than 3% of their value.
What catastrophic news was behind this?
Well, the Federal Reserve's top policy-setting committee released a statement on Wednesday that said there are "significant downside risks to the economic outlook, including strains in global financial markets."
A couple of manufacturing indexes in China and Europe indicated that factory production over there is slowing down.
Then new claims for jobless benefits in the United States declined over the past week, but not enough to fall below 400,000.
I understand there's a serious and perhaps even growing risk of a second global recession.
Just show me how that economic data or the Fed's gloomy outlook (is anyone still listening to Ben Bernanke anyway?) brought much new to the doomsday party.
Yet this is what all of the reliable experts tell us was behind the rout on Wall Street that pummeled my Individual Retirement Accounts and 401(k)s once again.
Which raises the next question: Where are all of the big players stashing the cash they're taking out of the stock market?
And should I be following the lead of these titans of finance?
I think not, because it seems that all of the big money managers were fleeing to the safety of bonds -- primarily U.S. Treasury debt.
The yield on 10-year Treasuries fell to a pitiful record low 1.71%.
But if this keeps up, they'll need riot police around the Treasury building to keep those guys from throwing bags of money over the fence.
I don't pretend to know whether the country is going to fall into a double-dip recession, or whether Bank of America is going to fail, or if Greece will default on its bonds. (OK, I'm 98% certain on that one; Greece is going to default.)
But I do know that I can't make enough to send my kids to college and retire comfortably by investing in 10-year bonds paying less than 2% interest.
It’s tough to watch my investments, many of which had just recovered from the 2008 financial crisis and recession caused by the reckless lending of the American banking industry, swoon again.
Yet I've got to endure this crazy volatility, because there’s virtually no way to achieve the financial security I'm seeking without the substantial potential returns only stocks can deliver.
I'm forced to take this risk, because our political and corporate leaders have decided that they can no longer provide pension plans or spend enough on higher education to hold down ever-rising tuition costs.
I'm on my own.
I have to endure whatever ups and downs Wall Street's big investors may put me through.
But I don't have to like it. Nor do I have to think these panic-driven money managers and investors are all that smart.