John Bogle on Investing: The First 50 Years

5

BUY STOCKS? NO WAY!

ORIT'S A DANGEROUS GAME. … IT'S A VOTE OFCONFIDENCE THAT THINGS ARE GETTING WORSE. …THE MARKET HAS BECOME A CRAPSHOOT. …THE SMALL INVESTOR HAS BECOME AN ENDANGEREDSPECIES. … THE STOCK MARKET IS ONE OF THESLEAZIEST ENTERPRISES IN THE WORLD.

The American Association of Individual InvestorsPhiladelphia ChapterSeptember 27, 1988

I HAVE GIVEN my remarks this evening this rather long title to convey to you a clear picture of the low repute in which common stocks find themselves today. My title is simply the headline from an article that appeared in Time magazine dated September 26, 1988, and a collection of excerpts from the story. And it suggests that, if there is any substance whatsoever to the theory of contrary investing, today is far more likely to be a time of investment opportunity than the harbinger of Armageddon.

Buttressed by a chart (illustrated with an enormous bear) showing that the percentage of individual investors with immediate plans to buy more shares has dropped from 35% at the market high in August 1987 to 3.7% in September 1988, the Time article is one of a proliferating series of articles in the press purporting to analyze the equity environment in the year following the great stock market crash of October 19, 1987. It illustrates not only that investors have lost their appetites for stocks, but why they have.

There are, of course, infinite examples of this change. One of my favorites is the recent disappearance of the NBC “Before Hours” financial ...