Read This Before the Market Crashes

I just watched Maria Bartiromo slap around one of those monster screamers on CNBC.

I won't call the fellow out by name (eventually he's going to be right, right?), but I just had to pile on with this: "You go, girl!" It's about time somebody stood up to one of these Chicken Littles.

Yes, the market may crash!
Heck, it may have crashed before you read this. But I don't care. Honestly, what do we care if investors open the floodgates tomorrow morning? Think I've lost my marbles? Well, let me explain ...

I graduated with a degree in finance in May 1987. (My mother still can't believe it.) A few months later, the stock market "crashed." I was a bull then, and I've been one ever since. But back to graduation ...

Whether it was to divert attention from her shock that I'd passed, or to better express it, I'll never know. But the day I chucked "Modern Portfolio Theory" for good, my mother handed me a rectangular plastic case with a worn black rubber handle.

So what was inside?
I'll tell you. For now, just know that I could have sold it instead of keeping it and used the money to buy Intel (Nasdaq: INTC  ) . I'd have more than a thousand shares right now worth nearly $23,000. You know where this is going, right? If I'd bought Microsoft (Nasdaq: MSFT  ) , I'd be sitting on $72,000.

I'd look a bit more human holding onto Sun Microsystems (Nasdaq: JAVA  ) . I'd have just four grand. But if I'd waited a year and bought Dell (Nasdaq: DELL  ) instead? I could hire Paul Reed Smith to clean out my garage -- and while he's at it, craft me a brand-new graduation present from Hope diamonds and dinosaur bones.

OK. Those are some outrageous examples. So, let's dial it back a bit. What if I'd bought Johnson & Johnson (NYSE: JNJ  ) ? Hardly took a genius to buy ole J&J in 1987, right? Well, now I'd have more than $15,000. Or how about old-school ExxonMobil (NYSE: XOM  ) or even AT&T (NYSE: T  ) , which has seen its fair share of breakups and mergers in those intervening years? I'd still be in great shape.

Still too good to be true?
Boy, tough crowd. Let's just assume I sold my new toy and dumped the money into a plain-vanilla S&P 500 index fund, and then went to grad school to "learn" to write poems and watch Denis Johnson not drink. I'd still be up 335% -- even after the latest "market crash." Of course, that's my point.

And that's why I work here at The Motley Fool. And why those Chicken Littles on TV drive me nuts. They cost you money. That's also why I was thrilled to help out David and Tom Gardner when they launched their Motley Fool Stock Advisor newsletter back in 2002 -- in the teeth of an earlier bear market.

After all, Stock Advisor is not just about helping ordinary investors like us find stocks that beat the market. It encourages us to stay in the market and harness the power of this unstoppable long-term wealth-building machine. Through good times and bad -- no matter how scary the future looks day to day.

Give me date ... a date!
That's what I think Maria should say to the next Chicken Little that hits CNBC. "Give me a date." Remember, I graduated from college back in 1987. What you might not remember is that the decade in which we "borrowed a trillion dollars and threw ourselves a party" wasn't the 2000s -- it was the 1980s.

The 1970s -- now that was the decade we "amassed the crippling debt that was going to bring us to our knees." Sound familiar? So please, perma-bears: Next time you get on TV saying "the sky is falling," "we're breaking beneath the yoke of debt," or "the U.S. economy is headed for years of contraction if not outright depression" ... give me a date!

As for you, fellow investor, take these dire predictions with a grain of salt. And if you're in your prime savings and investing years, promise me you'll stay invested and keep on investing. Yes, the market will go down. We will have another recession. But that was true when I was a boy back in 1979 -- and here we are again.

So what the heck was in the box?
Earlier, I mentioned David and Tom Gardner. I can't speak for their precise beliefs, but I assure you they're long-term bulls on America and its markets. And according to watchdog Hulbert Financial Digest, they're having no problem whatsoever digging up great companies that are making folks like us a lot of money.

To the tune of 17.7% annualized, according to Hulbert. If you want to see why their recommendations are up an average 40.5%, while the broader market has managed just 6.5%, consider this: Try Stock Advisor for an entire month on me. You can take 30 days to decide if you like what you see.

Of course, nobody can guarantee that David and Tom will keep up this pace forever, but it's their sworn mission to help you beat the market year after year. My money's on them. Plus, now you've got nothing to lose but your fear. To find out more about this special Stock Advisor free trial, click here.

This article was first published July 13, 2007. It has been updated.

Paul Elliott opened the box. It wasn't a Paul Reed Smith. It was a mid-'80s Fender Stratocaster. Made in the U.S. of A. Paul still owns the Strat, as well as Johnson & Johnson. Intel, Microsoft, and Dell are Motley Fool Inside Value recommendations. Johnson & Johnson is an Income Investor pick. You can view the entire Stock Advisor scorecard immediately with your free trial. The Motley Fool is investors writing for investors.


Read/Post Comments (2) | Recommend This Article (7)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 14, 2008, at 7:25 AM, jdubrox wrote:

    What a completely stupid article. The title led me to believe that something of use would be contained herein. Yet, all I see is an unedited "What-If" article that users post on Fool 5 times daily.

    Were you in a haste to publish this hypothetical article?

  • Report this Comment On July 14, 2008, at 9:50 AM, Stocklovr wrote:

    I totally disagree with the previous comments. The title indicates some useful info on timing the market. I am frankly glad that it doesn't! I believe that the media and all the prognosticators they give air time to, hurt many investors. Their comments indicate that you can time the market. I think this is an extremely difficult thing to do and not for the majority of investors.

    I have seen this article before but it bears repeating. I too am also sick of the perma-bears making predictions. They don't know what the market is going to do from one minute to the next any more than anyone else. Put two "pros" on the air and you're guaranteed two polar opposite opinions!

    This article basically says to ignore the noise from the media and be a long term investor.

    By the way, there are a couple of perma-bears who wrote books about financial "Armageddon" who actaully gave dates... that never happened. That doesn't keep them from writing more books for true "fools" - non-Motley of course.

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