Five Lessons From the Credit Crisis

By Sean Hannon, CFA, CFP, of Covestor.com

During September, the Dow Jones Industrial Average has dropped nearly 10%. This compares with drops in the Nasdaq of 16%, the S&P small-cap index of 9% and the Wilshire 5000 of 14%.

While prices were dropping, the government became linked with the capital markets. Over the past year, we have seen the Treasury and Federal Reserve attempt to influence behavior.

All of these actions were done at the edge of acceptable policy and were meant to unclog the capital markets while allowing free enterprise to reign supreme. Over the past month, government intervention increased and free market ideology was swept aside. ...