Actor Michael Douglas has learned a few tough lessons in the stock market. And they're lessons that all of us could benefit from.
More than two decades after starring in the hit movie 'Wall Street' and making the phrase "Greed is good" popular, it turns out that the 65-year-old actor has discovered that greed is, uh, not so good after all.
Douglas, who is married to actress Catherine Zeta Jones, portrayed a trader named Gordon Gekko in the 1987 Hollywood film. Then in the 1990s, Douglas apparently thought life might imitate art and he started making big investment bets of his own -- particularly during the tech boom.
But after spending years chasing returns and trying to find the next hot stock, Douglas admits he lost a huge fortune when the stock market took a beating in 2008.
"I lost 35 to 40 percent of my net worth on the 2008 crash," the actor said, according to
a report in The Sun newspaper.
That financial disaster appears to have jolted some sense into Douglas. He said he pulled "a big chunk" of his money out of stocks at the end of last year. If that's the case, Douglas likely also recovered a huge sum of his money. After all, despite two horrible years in 2007 and 2008, the S&P 500 index rose about 26% in 2009.
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Which leads to this lesson: Don't immediately bail after you have big losses in the stock market. Many times, the market recovers, as it did in 2009. Still, taking some money off the table was probably a wise move on the actor's part after the market's big gains of 2009 -- but most 65-year-olds could still benefit from having some money invested in stocks.
In Douglas' case, he can easily take a break from the markets, since he's still estimated to be worth about $140 million. Not too shabby.
Look for the sequel to 'Wall Street' to come out in September, titled 'Wall Street: Money Never Sleeps,' co-starring Douglas and actor Shia LaBeouf. Douglas
reportedly told Esquire magazine that LaBeouf got into character by doing some big time investing of his own. "He took $20,000 and in six weeks he was up to $380,000. He did all right," Douglas said.
That's more than just "all right." I don't know what the heck LaBeouf invested in -- or even if real money was at stake -- but going from $20,000 to $380,000 means LaBeouf somehow generated a miraculous, mega, unheard of return of 1,800%. In just six weeks. Totally unreal. Or at least unrealistic and unsustainable.
So let's hope LaBeouf can separate fantasy from reality here. It's one thing to make money on high risk investments when you're basically gambling in the short-run. But mastering the art of investing for the long-term is another matter altogether.
That's a lesson Michael Douglas has learned -- the hard way!
Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times bestseller,
'Zero Debt: The Ultimate Guide to Financial Freedom.'
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By: Parag on 1/28/2011 4:18AM
When you learn form your mistakes or elders experiences, it ought to give you good results. There will be highs and lows in personal finances and stock markets. Staying alert to all kind of situations is the key to succeed financially.
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