A Yellow Flag For the Inexperienced Investor

A detailed Summary of A Yellow Flag For the Inexperienced Investor

Near the turn of the century, many inexperienced investors jumped into the stock market. They watched with glee as the market continued to skyrocket higher and higher, seemingly without a ceiling in sight. The NASDAQ 100 Trust (Ticker Symbol QQQ) is a very good indicator of this market. It represents the top 100 stocks in the NASDAQ market. When QQQ arrived on the market in March of 1999, the public offering price was $52.47. In March of 2000, QQQ reached a high point of $213.50. A year later, QQQ was valued at $39.15. As of February 2003, QQQ is priced at a paltry $24.21. To sum up these numbers, the top barometer of the NASDAQ stock exchange, QQQ, has lost nearly 89 percent of its value in the past three years. Many individual stocks have lost even more than the 89 percent that has been lost by QQQ.

The stock market soared during the late 1990's because the economy was very robust. Many brokers and analysts proclaimed the Internet as the future of retailing. Many experienced investors shifted their resources and funds to upstart Internet companies, driving those stocks prices rapidly higher. For example, in January of 1999, a single share of

Tyson, Eric. Investing For Dummies. (Hungry Minds Press, 1999), 102-05.

The past couples of years have been a rough education process for many young investors; rough enough to drive some of them out of the stock market all together. New hiring's have slowly tremendously during this time, forcing a struggling economy into a deeper recession. The tragedy of the World Trade Center attack has also shaken investor confidence in the stock market, driving the price of many stocks down to their lowest level in years. On top of everything else, war with Iraq and the unresolved nuclear situation with North Korea looms ominously on the horizon, causing a lot of people to take a "wait-and-see" attitude toward reinvesting in the market. Many of these investors have learned a very hard lesson about sinking money into territory they are basically unfamiliar with. Those who have not invested, but are interested in testing the stock market, should seek out these people and listen to what they have to say. The lessons that can be learned are some of the most valuable lessons out there.

One of the main problems with the downshift of the stock market was that

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Approximate Word count = 777
Approximate Pages = 3 (250 words per page double spaced)

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