However, somewhere around the time the Internet started to become a factor in investing, things become much more volatile and unpredictable. You can see the chart below that shows a very steady increase in the Dow from 1981 all the way up to about 2000. Then things start to get a lot more choppy and the ups and downs are much bigger.

Buying and holding stocks in those early years on the graph was a winning play. You could confidently buy most any solid company, forget about it for 10 or 15 years, and come back to see how much you made. But from the 2000′s onward, things seem to have changed and I attribute much of that to the Internet.

Online trading is now the way most people buy and sell stocks. It is quick, easy, and cheap which at one point led to the proliferation of day traders. Guys (and gals) trading in and out of stocks every day made for a lot of volatility and you can see a big difference in the chart from 2000 to the present. Day traders weren’t investors and they weren’t interested in picking good stocks that had value. They just wanted to find the best stocks to buy right now, get a quick up tick, and then they were happy with their small gain and sold. You can see how much things have fluctuated since 2000 in the graph below:

The Internet has also made information on companies and the business news of the day accessible to everyone almost instantly. This has helped to somewhat even the playing field between the professionals and the everyday average investors. Things happen fast now and when news breaks, everyone knows about it and reacts. This is a big departure from the way news traveled in the 1980′s.

Technology now is progressing at a quicker pace than it used to. There are new industries popping up all the time (like sun power, wind power, recycling, and others) that take the place or add onto the way we do things. New companies are formed and old ones have to adapt to survive. This makes buying and holding stocks for long periods of time no longer a profitable way of investing. Now, when you buy a stock, you need to keep a close eye on it more than ever before.

There are many sources of information including the “Stock Market For Dummies” types of books that are geared toward beginning investors. Online and offline, you can now find more stock market material than ever before. People who might have never before gotten interested in stocks are now pulled in because of the ease of it all. This all contributes to more investors who are unsure of what they are doing and more likely to panic and sell when things look bad or buy too high when the market is flourishing.

The stock market is indeed more of a crap shoot than it was 20 years ago. It doesn’t mean you can’t make money in it: it just means you have to keep tabs on all your investment choices and watch them carefully all the time. Long gone are the days when you could buy a stock and sit back and hold it for a long period of time.

Generally though, when economic times are tough, so are the fates of most companies and stocks. After a solid 2009 for the market that saw it head steadily higher after about February, how can things continue on with the state of the economy looking so awful?

Right now the Dow is treading water and today it has pulled back above 10,000 which is a number that really has no significance at all. 2010 has been an up and down ride so far and it looks to me like there have to be more uncertain times ahead which will cause the market to go down.

President Obama keeps spending our tax money like there is an endless supply of it. He keeps promising better things ahead and yet things don’t get better. The new Obama jobs bill he just announced is probably just going to drain more of our taxpayer’s money and give us little in return. Companies continue to lay off workers and with unemployment remaining around 10%, is there really any reason to be optimistic about the near future?

When the economy is doing poorly, the stock market has to follow eventually. When company profits are down and there is uncertainty everywhere, investors will stop putting in new money sooner or later. While this has only happened a little this year, it seems like the bad data coming out every week will eventually spook investors.

The Dow has had a good run up for the last year and investors who benefitted will decide to take profits if things continue to look scary. With Obama and the Democrats in charge throwing our money around like drunken sailors, how can anything get better anytime soon? Here at Stock Market For Dummies, we want to invest in new stocks but are just too scared right now. How do you feel about the economy and the stock market?

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Getting the best stock market results is a never ending quest for up to date information and the best stock picking analysis. If you don’t feel like you have the ability to do it all yourself, Morningstar.com is a great place to go to learn about the market and keep abreast of all the news you need. Especially if you are thinking of buying stocks for the first time, you need a service that will guide you through the learning process and help you get your feet on the ground.

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