What happens if the price of the stock actually DROPS?

It seems as if everyone from about 1996 (maybe even as far back as 1994), just seemed to believe that we had created some new "miracle" economy, where we would never have another recession or depression. It seemed that the "New Economy Buzz" was so great that we all (or most of us) believed the lies.

At the time my BEA stock was at 80, analysts were predicting it to go to 300, now it struggles to stay above 5. Luckily, I bought below 5 (a long time ago). At the end of 2000, I had made enough money consulting that I didn't really want to take the tax hit in 2000.

However, by early 2001, it was on its way down, and down, and down. And here we are back at 5.3-5.4.

I guess noone remembered 1929. I warned people in 2001 when I started "seeing signs" that things were going South, but sadly, I didn't take myself seriously enough to just "get completely out" and sit on the sidelines.

Now, I'm being quoted things like "it took 27 years for the 1929 stock market crash to reach the same pre-crash level". It makes me want to just sell out with what I have left, pay off what debts I can, and worry about my retirement a little closer to my retirement.

My wife's parents paid off their mortgage and managed two pensions with GM plus social security, plus some 401K. My parents still have 60K left on their mortgage, two car notes, and they're both on Social Security with no pension (and both work).

The next 20 years are the prime years I need the multiplier to work for me, but alas, I'm almost convinced the compound interest effect will be broken for at least 10 more years.

I can't believe that these executives didn't have enough foresight or gray hair to remember that sometimes stocks to go down, and that money grown slowly is much more resilient than the quick buck.

You're just questioning using the stock price/index as a single measure of a return to wealth during the 1929 - 1950's period.

And I can agree with that somewhat. For example, our SBC stock is down about 33% since we bought it. However, SBC pays dividends, so we need to compute the dividends we'll be paid into the valuation model.

And I'm probably stretching to use that single indicator as a good general indicator of renewed business activity. Actually, I've studied the Great Depression and, based on GDP figures, things bottomed out in 1933, slowly turned around in 1934, and things really started looking up by the late 1930's (1938, 1939) when the U.S. started supplying munitions and arms to Europe, which was already engaged in WWII.

So, I can't imagine things going down for much longer than 4 years. And we're already 2 1/2 years into this one, so maybe we're already halfway done.

Then again, Japan's economy seems to be in a decade-long malaise that I can only attribute to their lack of political will to allow companies to fail, their assets to be sold, and new companies to be created from their remains.

Hopefully, we're still enough of a "capitalistic" country that we can get this downturn overwith in the next year to 1 1/2, then assets will be sufficiently redistributed to capable capitalists where we can develop and grow again.