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BREAKING NEWS! Stock Market Plunges 1,100 Points This Morning . . .

The stock market opened this morning with the Dow dropping as many as 1,100 points. To put this into perspective, the Dow has never closed down more than 800 points in a day!

 

I briefly turned on a financial TV channel to see what the financial gurus were saying. They were obviously struggling to explain this huge loss. Unlike their usual self-assuredness, they were unable to clearly articulate why it was happening and what was going to happen.

 

As we’ve been sharing with our MoneyWise listeners for the past couples of years, when any market has six straight years of amazing growth in value and is at or near record highs – we need to be cautious! So, we’ve been recommending no more than 25% of an individual’s investments in the stock market. And we’ve encouraged investors to do their homework and invest in solid companies that have little or no debt and pay a dividend.

 

The two passages that give us the clearest guidance when it comes to investing are Proverbs 21:5, “Steady plodding brings prosperity; hasty speculation brings poverty.” In other words, be a consistent investor even if you can afford just a few dollars a month.

 

The other passage is Ecclesiastes 11:2, “Divide your portion to seven or even eight, for you do not know what misfortune may occur upon the earth.” In other words, it’s wise to diversify and not to put all of our investment dollars into one basket.

 

One final thought. When we face major financial challenges that are global and beyond our control, remember what 1 Timothy 6:17 tell us: “. . . don’t fix your hope on the uncertainty of riches, but on God who richly supplies us with all things to enjoy.” All riches are uncertain. Stocks, real estate, bonds, and gold go up and down in value. There is only one thing on the planet that is certain and that is the Lord Himself. He told us in Hebrews 13:5, “I will never desert you, nor will I ever forsake you.”

Stock Market: recession

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Invest Wisely in 2015

One of the keys to investing wisely is to apply Proverbs 21:5, “Steady plodding brings prosperity, hasty speculation brings poverty” (emphasis added).

Many people violate this steady plodding principle in a number of ways:

  • Going heavily into debt to invest
  • Investing in things they don’t really understand in the hopes of making a good return. If you can’t easily explain the investment to your spouse or a friend, don’t make the investment.
  • Having to make a quick decision. The promoter often will tell you, “This deal won’t last long, it’s a once in a lifetime opportunity!” A successful investor once told me, when people are trying to sell him an investment it’s always a once in a life time opportunity.

If you avoid using a lot of debt to invest and you take your time and do your homework, might you miss out on some rare opportunities? Sure, but more often than not, you’ll miss out on rare money losing opportunities. So, take your time and do your homework. And don’t forget to get wise counsel from godly experienced people. This is huge. Proverbs 12:15 says, “The way of a fool is right in his own eyes, but a wise person listens to others.”

Warmly in Christ,

Howard Dayton

Checkout www.SoundMindInvesting.com to learn more about a biblical perspective of investing.