How Airy Fairy Are Stocks?

Money In Stocks Is NOT Like Cash In Bank

The above statment is obvious to anyone who has followed the stock markets for any length of time, yet it is amazing how many pension funds and personal retirement plans are based on the value of a stock trading on the open market.

A recent example this year of just how unreliable stock portfolio's can be has been the free fall of the once blue chip stock in RIM, makers of the market dominating Blackberry for years.

That favourite Canadian success story has seen the market value of it's stocks plummet by nearly 77% in a very short time from a high of $64.15 on Feb. 28 to a gut wrenching $13.53 on Dec. 19th.

Few people seem to remember that auto giant General Motors actually went bankrupt and would not be around today without a massive input of government money. Nortel and Enron are two other examples of just how quickly 'paper wealth' can evaporate overnight.

Now would be a good time to employ some good old fashioned principles that served our parents and grandparents well, and that is to quit spending more than we make, and quit kidding ourselves that we can actually afford a lifestyle simply because we want it.