::::::::::::: E Street :::::::::::::
Nancy Perry Graham
Editor, AARP THE MAGAZINE
aarpmagazine@aarp.org
The Week the Earth Moved
I was living in Los Angeles during the famous
1994 Northridge earthquake, which had the
strongest ground motions ever recorded in an
urban area in North America. It jolted me out
of bed at 4: 30 A.M., and it was the most terrifying
wake-up call of my life.
In retrospect, that 6.7-magnitude
tremor felt a lot like the wake-up
call that hit Wall Street during the
first eight days of October, when the
Dow plunged 22 percent, to 8,451. It
happened fast, reshaped the landscape, and the aftershocks—some
major—continued for months, leaving
everyone feeling unsettled and
uneasy about the future.
Life in L.A. eventually returned to
normal, as it will on Wall Street. But
both earthshaking events served as
powerful reminders that the best
way to live with risk is to get the
facts, know your comfort level, and
be prepared.
Richard Hisey, president of AARP
Financial, says that in times of confusion the best thing to do may be
nothing at all. “This is a good time to
sit back and reflect,” says Hisey.
“Should I be more conservatively po-
sitioned? What is my risk tolerance?
And look everywhere before hitting
your retirement assets. Because if you
take money out of the market, it will
further impair your ability to make
money when the market comes back.”
Here’s why: Standard & Poor’s
equity research finds that the S&P
500 typically recovers about 33 per-
cent of its point decline from the
bottom of a bear market in approxi-
mately 40 days. Pulling out means
missing the comeback.
To find out how our members
are coping, I called a few who chat
regularly on AARP’s website
( www.aarp.org). One is Shelby
Schwartz, 68, a retired real-estate
sales agent living in Madeira Beach,
Florida, who has watched the mutual
50+ Investors Less Keen on the Stock Market
Conventional wisdom has
it that younger investors
should keep retirement
savings mostly in stocks.
But an October AARP survey
of 50+ investors asked
what portion of savings
they would advise a person
30 years from retiring to
have in the stock market…
19 said:
None
44 said:
Some but
less than
half
17 said:
Half
8 said:
All or most
Don’t know
12 said:
4 AARPJANUARY&FEBRUARY 2009
SEEING RED… Editor George Blooston urges
the public to “keep demanding answers.”
savings shrivel away. “It’s a scary situ-
ation,” she says. But Schwartz is
leaving her money where it is. “The
experts are telling me to hold on.”
Resisting the fears that panicked the
stock market may be a long-term
assignment for us all, as our special
report “How to Get the Best of the Fear
Economy” (page 44), spearheaded by
features editor George Blooston,
makes clear. “The only real cure for
fear is information you can trust,” says
Blooston, who learned his way around
the markets at Bloomberg News.
To help readers cope with the challenges of an uncertain economy, AARP
THE MAGAZINE is launching a series
of online financial makeovers. (For details turn to page 48.) Looking ahead,
we’ll all be counting on President-elect
Barack Obama and Vice President–elect
Joe Biden to get the United States back
on the road to prosperity. It won’t be
easy, but in this great nation of ours,
the only things we can’t do are the
things we choose not to do.
CLOCKWISE, FROM TOP LEF T: ILLUSTRATION B Y RANDALL WATSON; RON AIRA; INFOGRAPHIC B Y YONGSEUK LEE; SOURCE: AARP THE
MAGAZINE SURVE Y OF INVES TORS AGES 50+: REAC TIONS TO 30 DAYS OF FRENZ Y IN THE FINANCIAL SEC TOR AND S TOCK MARKE T
