Saver vs Investor
This has to do with the definition of a saver versus an investor. Recently I was reading a book called "Prophecy" by Robert Kiyosaki, an observation that there are many people who have put money into the Stock Market or mutual funds through their 401K. So often that is referred to as they are an investor, or they have invested money in the Stock Market when, in fact, the observation is made that all they have done is save money. So there is a need to define what a saver is versus an investor.
A saver saves their money, gives up their money to someone else to investor in some way put that money in motion. But the saver, by definition, doesn't understand where the money went and is not in control at all. So many people who have saved money in a 401K to put into the market are not investors. They don't know what is going on, and they don't know how to find out how those managing the funds can make any changes to improve their situation.
An investor, however, is a person who keeps their money and puts it in motion and always knows where it is and what it is doing. My suggestion is there are so many people that are savers and not investors who will then follow each other into a bad time. As the market is going down, they will jump out as it is going down and cause an even further reduction in the market, or vice versa, when the market is going up, they will climb on, and they will just keep putting more money in and follow the masses.
In the future, it is going to become obvious that when a ton of savers, at least 80% to 90% it is estimated, are savers in the market will just follow each other, and they will have another huge Stock Market crash. You can tell when there is so much uneasiness because there will be new highs and new lows. So March 14, 2007 was one of the largest drop-offs in value in the Stock Market, in the Dow Jones Stock prices. Since March 2007 until right now, approaching March 2008, it has now three more times hit an all time low and slowly comes back. The largest drop in value in one day has been posted three times since last March, showing such unsteadiness in the market. So savers beware. You have no control, and you don't know what is going on. It is better that you go on the sideline. Just put your money in Money Markets and leave them there and not be subject to market risk.