Photo Credit: Annette Shaff / Shutterstock.com
by Phil Cannella
If anyone out there is still not convinced that the stock market is too volatile for people in or near retirement, I give you this story:
Tuesday afternoon, hackers took over the Twitter account of the Associated Press, an account that nearly one million followers count on to deliver the news in brief. The hackers then sent out a false tweet indicating that the White House had been attacked by bombers (it hadn’t) and that President Barack Obama was injured (he wasn’t).
It’s bad enough that hackers would attempt pass off a fake story like this one, especially while unlawfully controlling the account of a highly respected news agency. But the hack attack caused some other consequences for the U.S. economy.
After the fake tweet was posted, the Dow Jones Industrial Average fell 150 points almost instantly as traders became concerned about the future of the American economy. With the Boston Bombings still fresh in the public’s mind, news of yet another attack in less than two weeks shook the confidence of American investors.
Luckily, the tweet was revealed to have been faked and the AP’s Twitter account was suspended before the hackers could do any more damage. While the stock market quickly recovered, the damage to investor confidence had already been done.
Incidents like this go to show you just how volatile the stock market can be. If the actions of a random hacker can cause the stock market to crash so easily, imagine the kind of havoc real world events can wreak on the fragile market indices. We saw how a less-than-stellar economic growth report coming out of China caused market crashes in The U.S., Europe and Japan and quickly eroded the value of Oil and precious metals worldwide. The Boston Bombing caused the markets to drop, as have countless other incidents in the past. The truth is, events like this cannot be predicted, and cumulatively, they add up to a large drop in consumer confidence.
So I have to ask again why so many investors are putting their confidence in the fragile stock market. It seems like so many factors can cause market indices to come crashing down, yet investors still feel like they can accurately predict the movement of the markets. The closer you get to retirement, the less you can afford to gamble with your retirement savings. The market has proved to be especially unpredictable late, so maybe the time to get off the markets is now.
Phil Cannella is the founder and CEO of Retirement Media, Inc.