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2008 was "the day year the music died" for millions of Americans. With a 48 to 52% loss in their 401k's, stock portfolios and mutual funds, many Americans were forced to cut their lifestyle extremely or work another 10 to 12 years if they'd been planning on retiring in 2008.
For many it was hard to believe because "as long as I remember the rain kept pouring down." And folks like Walter Updegrave didn't help any as he dumped a few more buckets of rain down to conjure up hope that the "music" was still playing. Writing in CNNMoney, July 2009 Updegrave said, "As crazy as it sounds, it is possible that last year's market crash could even work in your favor." To justify such nonsense the market would have to "produce an annual rate of return of 12.8% for the next decade"[i] straight for this recovery to actually happen.
So what has the market produced for all those who keep going "down to the sacred store" to see if the "music" is still playing? Well Dalbar reports that "the average mutual fund investor achieved an average 3.8% annual rate of return while the S & P performed at 9.1%, equity investors earned 3.83% and asset allocation fund investors earned a whopping 2.56% (while) for the same time period fixed income investors earned 1.01%."[ii]In other words "the music died" but "the rain keeps coming down!"
Hopefully most Americans learned in 2008 that speculation and saving are entirely different subjects. If you didn't learn that the "rain keeps falling" even after the "music died" then I hope you'll learn soon that the "rain keeps coming down" as long as you are gullible enough to believe in speculation. Americans who have become privy to this fact have moved on to real capital growth and beyond the constant dripping of the rain which speculation promises.
Speculation puts your hard earned assets in the control of somebody else besides yourself. Savings keeps your own capital under your own control. And the control of money is what produces wealth. That is why the bankers, financial planners and hedge fund operators want you so badly to give them the control over your money because they profit hugely by using your money!
But consider my friends who've learned from me how to save instead of speculate. They now pay themself what they had to pay to others for their cars, equipment, groceries, clothes, utilities, credit cards, mortgage payments, etc. And all because they stopped listening to the "rain pouring down" and realized that "the music has died." In other words they have now become responsible for their own capital growth.
Capital is what makes the economy progress and prosper. If you don't have any capital to control then you can't progress and prosper either. Stop for a moment and think about how much money that you have made but which others now control. Isn't it time that you stop listening to the "rain that keeps pouring down" and start planning around the fact that "the music died?" When you do so, something magical will happen...your own music begins to play!