Rush Analyzes the Stock Market

RUSH: I don’t know why people ask me, but they ask, ‘What should I do in the market? What shouldn’t I do?’ I counsel patience. The fundamentals here are fine. But look at this. I was looking at U.S. Snooze and World Reports, the issue dated August 6, 2007, and on the cover of that issue is this blurb: ‘If you had invested $1000 with Warren Buffett at 1956, it would have grown to 27 million’ today. Fifty years, a virtual lifetime of employment, $1,000 to $27 million. That’s 27 thousand times your investment! ‘But, Rush! But, Rush! What’s the point? I’m not Warren Buffett. What are you talking about?’ Forget Warren Buffett here, folks. Warren Buffett isn’t the point. Look at the lesson of the words: 50 years. That covers a lot. Look at how many market corrections there have been.

Do you know what a ‘market correction’ is, Snerdley? A market correction is defined as a market going down 10%. If the market goes down 10%, then the experts up there say, ‘We’ve had a correction.’ We’ve had lots of corrections in 50 years. We’ve gone up. We’ve gone down. We’ve had crashes In the ’87 crash everybody panicked left and right. We’ve had the Jimmy Carter years. — and we’ve gone sky high too. The point is in 50 years, if you start investing in things and leave it alone and be patient, in 50 years a thousand dollars with Warren Buffett today would be worth $27 million. There have been some pretty real panics in those 50 years, and there have been some some imagined panics. I know you’re still saying, ‘But, Rush! But, Rush! I’m not Warren Buffett.’ I know that. Lesson Two: Warren Buffett is smart, but don’t think he’s a soothsayer. Don’t think he leaves the market before it tops and reinvests before it hits bottom. Nobody can predict what’s going to happen when. He makes investments in good companies; he accepts the downs of corrections and bear markets over the long hall. His methods are not secret. Anybody can learn them. ‘Do you mean, Rush, I can make 27 thousand times my money?’

No, no, no. That’s not what I’m saying here, folks. I wanted to use that example because it was on US News, but you could be one tenth as good, or one hundreth as good. Remember, you’re not starting with just a single $1,000. That’s just an example. Try a thousand dollars a year that you invest or try a $1,000 a month, whatever you have, and then add it up over 50 years. This takes us to lesson four — and this is the real point about all this. Just think if your Social Security withholdings were invested for those 50 years, not just the thousand dollars. Even half of your quote-unquote ‘contributions,’ the FICA on your pay stub, imagine that’s invested and you leave it alone from the minute you start working until the day you retire. Yep, the market is going to go up and down. It’s going to have corrections.

There’s going to be bear markets. There’s going to be imagined and predicted crashes, just like there have been always. You can take any 50-year period of the stock market, and you’re going to find those same ups and downs, but over those 50 years — whenever you start and whenever you end — you’re going to find the market way up over when it started at the beginning of the 50 years. So this Social Security business when they tried to reform it, the president wanted to reform it and let people invest a portion of it, you have a market like today and the Democrats say, ‘Oh, noooo! Everybody’s going to lose everything they’ve got,’ and of course inexperienced people say, ‘Oh, yeah! I am going to lose everything.’ No, you’re not going to lose it. You just leave it alone, and you don’t panic.

Now if you’re looking for signs, yesterdays volume on the stock market was lower than the day of the last big drop ten days ago. That’s an encouraging tealeaf — and the FED, twice today they’ve pumped a lot of money into the liquidity market and it is causing the market to come back a little bit. It is rallying a little bit from when it just started tumbling again when it opened. But patience, patience, patience! Take any 50 year period, start to end, and you’ll find a market way up over where it began.