The Ultimate Money Guide for Bubbles, Busts, Recession, and Depression

Chapter 5. COMMON STOCKS: HOW TO AVOID BIG RISKS AND BOOST RETURNS

You've seen how many banks and insurance companies—supposedly the safest places for your money—have taken unprecedented risks that could put your entire financial future in jeopardy.

And in the last chapter, you've just seen how the dearest, largest, supposedly most reliable asset of millions of average Americans—their own home—was the object of speculation, deception, and a gut-wrenching bust.

So ask yourself: If this is what happened with an asset that should rarely be the realm of roller coaster thrill seekers, what about common stocks, which are normally subject to sharp ups and downs?

How much will the average stock be worth if the United States suffers a couple of lost decades like Japan did between 1990 and 2010? Or if we see a decline similar to the 1930s?

Conversely, suppose the Fed continues to print excessive amounts of paper money to drive asset prices higher? Will U.S. stocks truly benefit? Or will most of the money go overseas, driving foreign asset values higher instead?

If you have an investment portfolio or 401(k) in stocks and stock mutual funds, you don't have the luxury of sticking around for the answer. Yet, that's what most Wall Street experts are telling you to do. Even after the worst financial crisis since the Great Depression, the weakest economic recovery in a century, and massive money printing by the Federal Reserve in a desperate attempt to offset the crisis, most people who give advice about ...