Community Benefits

Investing For More Than Profit

by Jesse Ordansky, March 29, 2010

Given the recent stock market tumult, investors are becoming more conscious of where their money is being allocated. Rising trends of cautiousness and social responsibility have overtaken market players since the 2008 crash.

According to the National Bureau of Economic Research, the economic recession in America began in December 2007—shortly after which, stocks began to fall and the market bottomed out: banks failed, stock values plummeted, and individuals worldwide lost allocated money.

The crash of 2008 is arguably as significant as previous market failures in 1987 and 1929. Although the initial decline was not as severe, its relentlessness throughout early October left most investors financially devastated.

“No investment was immune from the crash,” says Dimitri B. Papadimitriou, president of the Levy Economics Institute of Bard College.

Individual investors were torn between cutting their losses and pulling their capital out of the market, or hoping for the best by riding out the market’s inevitable ups and downs.

According to Mike Kelley, senior vice president of Ulster Savings Bank, those who sold after the market’s initial collapse probably regret doing so. “The biggest mistake is, people pull out of the market when everything is down,” he says. “People who pulled out in January and February [2008] missed out.” Kelley also explains that in the past 12 months the market has risen 60 percent.

The crash hurt every investor somehow—from primary shareholders to prospective retirees relying on pension plans, everyone ached. However, those who chose to trust the market’s peaks and valleys rather than pull out immediately have recuperated a marginal amount of their initial losses.

In October 2008 the Dow Jones Industrial Average (DJI) closed as low as 8,175.77 but has since regained over 2,000 points. In March 2010 the DJI has hovered around 10,500.

Although many people do not have the means to put money into stocks and mutual funds, it seems as though a large portion of the working population is involved in one way or another. According to Papadimitriou, most people are involved through individual retirement plans or pension funds offered by employers.