The cause of this and other downturns

Speculation

Real estate, commodities and technology have historically been areas of the economy that have triggered an outbreak of the worst aspects of a persistent element of human behavior — greed.

Too much borrowing, followed by a credit crunch

Buying stocks on margin with no money down helped cause the Great Depression. Buying houses with little or no money down has been a major factor in causing the nation’s subprime mortgage debt woes and housing price debacle.

Lack of regulatory safeguards or enforcement

With each financial or economic crisis, new government and/or industry rules are typically put in place after a public outcry. Historically, someone has figured out a way to get around the new rules, or government has begun to look the other way when the public clamor subsides.

Fear

When market conditions appear to turn unfavorable, or there’s very unsettling news, an emotional response may set in. Uncertainty prompts some investors to head for the exit and ask questions later.

Past performance is no guarantee of future results. The Ivy Funds are managed by Ivy Investment Management Company and distributed by its subsidiary, Ivy Funds Distributor, Inc. Waddell & Reed Financial, Inc., the ultimate parent company of Ivy Funds Distributor, Inc., acquired the investment advisor to the Ivy Funds in December 2002.

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