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Stock Market Destroys American Wealth – What Else is New?

The stock market got hammered again today. The Dow Jones Industrial Average (Dow) was down over 3% to a close of 7114.78. That’s about 50% off from its high near 14,000 in 2007. Trillions of dollars of wealth continue to evaporate with the perpetual decline.

But this is nothing new. I have been warning others about this for years – since late 2004; bugging the hell out of everyone I knew. Since the first Forex managed account webinar we had in early 2005, we tried pounding it over and over into investors’ heads. “Get out of stocks! Get out of real estate! They are freaking bubbles!!!”

Even since late last year, as some thought stocks would recover, and as the idiotic stock analysts and portfolio managers on CNBC preached to continue investing in equities, I told everyone I knew to get out of the market (please read “The Ugly Side of Traditional Stock Investing” in the Day Trading Tutor blog).

But unfortunately, people have an almost mystical attraction for the wonderful world of stocks; continuously trying to catch falling knives as they drop and drop and drop….

It’s quite ugly already, but it could get uglier – believe me!

Another by-product of this widespread, exponential wealth reduction phenomenon is the destruction of even more wealth in various Ponzi and pyramid schemes that suffer blow-ups due to a shortage in cash. Just look at the recent ones like Allen Stanford’s and Bernie Madoff’s. There will probably be a lot more.

Most of these problems (including the astronomical losses in stocks and real estate) could have been avoided if investors would have put their greed hats on the shelf and used a bit of common sense; but, unfortunately, they never do. Greed and ignorance always take them over.

Even though the damage has already been done, I will write a few articles soon to help educate both investors and traders going forward; education that will hopefully stop the bleeding and prevent future hemorrhages. Hopefully!!!!

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