An Investing Rant

An Investing Rant

I hope you will forgive me on this post but I just needed to get some of these thoughts on paper. These ideas are not directed to anyone specifically I know but rather is a more general sentiment to a lot of comments that I see at the end of articles, on Facebook, Twitter, etc.

I have made no bones about the fact that I believe investing is one of the primary, if not primary, means that the regular person (including me) can make money and obtain a secure financial future for my family. There are certainly other ways to go about it, but for the average person I think investing  and investing for a long-term period is important.

Right now the stock market isn’t doing well at all. In fact, we are now in correction mode in all of the indices. There is now talk about it going lower, maybe a bear market, and the economy going into recession. All of that is possible. There is no doubt. If you are an investor right now is not a good time for you.

What I am most peeved about are the constant complaints of people on message boards, social media, and other places making claims that the stock market is a casino, the average retail investor can’t get ahead, the investing game is rigged, you will never be able to retire, and other claims. People who say these things blame Obama, Bush, the Congress, the Federal Reserve, Warren Buffett, the poor, the sick, immigrants, blah, blah, blah.

Frankly, I am just sick of it. Now I know I should just not read the comments of those articles or ignore people who make such statements on social media, but they seem more pervasive, even among people I consider to be friends and colleagues. I don’t know what it is, but to me it is just plain bunga.

Are their problems with the economy? Sure their are. Growing inequality among classes is the great economic issue of our time and I would do a lot to remedy it. Has there been corruption and malfeasance in the stock market? Absolutely. Are there bad people giving advice in the market like different advisers who just want to sell you something bad? Yes there is. Will you lose money? Yes, there will be times when you will lose money. It won’t go up forever and no one ever promised you that.

All of those problems aside you are not going to find a better way to get a return on your money then investing in the stock market. If you feel like there is corruption then invest in stocks or mutual funds that promote doing good for the economy. If you think fees are too high then invest in index funds, which are supremely cheap and give you lots of diversification. If people are selling you crap products then ask a friend to help you or here is a shocker: learn about it yourself. I mentioned in an earlier post that learning to invest in the market was like learning a new vocabulary and that we learn new vocabularies every day. Stop complaining that you don’t know what to do and pick up your computer or phone and go look up some terminology up. It isn’t hard. If you can  figure out a smart phone you can figure out the stock market or at least basic investing.

If you say that you don’t have money to invest have you looked at some of the indulgences you have in your life? What about that everyday coffee at Dunkin Donuts or Starbucks? What about eating out? What about a whole host of things where you waste your money. Yes, I said it. It is a waste of money, particularly if you are complaining you have no money, by going out to eat all the time or leasing a car or whatever. You can’t cut $100 out of your budget to put in a Roth IRA? Seriously? Stop your whining about it and do it. It might cause you to actually make a budget or do some hard reflection, but this issue is WAY too important for you to trade $5 a day coffee for a MILLION dollars! Are you willing to trade $5 a day today for a $1 MILLION in the future? I am not.

And BTW this message isn’t for those who are just scraping by and wondering where there next meal is coming from. I am talking to a lot of the Facebook/social media world who spend their money on things they don’t need and complain they have no money to invest in.

Enough with the casino talk, etc. That casino you complain about has an average return for the past 140 years of 10.5%. What casino in America has that kind of return? If it is a casino sign me up for more.

People use the current downturn in the market as an ‘aha’ moment.  They say “aha” I told you it was going to go down. I told you you couldn’t trust Wall Street. To those who would make such an argument I would say what did you expect? The average correction occurs ONCE per year. It has been FOUR years since we had our last one. We are also going on now the 7th year in the bull market. The average bull market lasts 4 years. We are due for a pullback. Markets can’t go up forever.

Finally, people also use the Chinese downturn as an example to rant and rave. Again, what did you expect. A couple of things: 1) The Chinese market isn’t open to much foreign investment. If you want to invest in China you have to invest through a different stock market out of Hong Kong. The reason that is important is because a lot of investors in China are inexperienced with how to invest. When I was in China the number one class that people wanted was an investment class, personal finance. 2) The Chinese stock market index that has went down the most also had the most improbable stock run ever. A year ago the Shanghai index sat at about 2100 less than a year later it was at 5200. That is a 150% return in ONE year. That is crazy. That is nuts. It is no wonder it came down. It is still 40% higher than what it was a year ago. Yes, the Shanghai index has lost a lot of money, but it grew at an unprecedented level and could never sustain those gains over the long-term.

The Bottom Line: Again, forgive the rant. I don’t know what has gotten into me. Perhaps, I take the comments of others as an affront to me somehow because I believe so strongly in investing. Maybe that is it. No matter where the origins of the rant the bottom line is that the people who are constantly degrading the markets, saying people can’t save, saying people can’t make some money by investing, and would rather put their money under their mattress I have no time for. I am just sick and tired of them sucking the oxygen out of the room. Rant over.

2 thoughts on “An Investing Rant

  1. I hear and feel your pain. The bright side in all this that the belief that the stock market is akin to playing the odds at Vegas is based entirely on fundamental ignorance of the market, and most likely investing in general. While there is some skill involved in Vegas, especially if you’re playing a game of cards at a table with other biologically-supported entities, it is primarily dumb luck whether you make or lose money in an evening.

    The stock market has a *historically proven* rate of return on virtually all money invested and will – almost guaranteed – provide returns on your money. And the reason is very simple:

    We understand that investing is a long-term process.

    Our goal is not to put $10k into the stock market one day and take out $12k the next – at least, that SHOULD not be the goal. That’s not the intent of the market, nor is that the proven mechanism for literally getting rich off of the market.

    The market will go down. Even the happiest person that we know occasionally has bad days. Even the most reputable company in the world sometimes makes a customer upset.

    It happens. There are no “sure things” in life. But, if these people are looking for a way to grow their money with ZERO chance of it ever dipping, then I’m afraid they are out of luck. Either understand the fairly simple precepts of the market, or keep your money under a mattress and hope for the best. Or invest in a U.S. Treasury Bond.

    At this point, if someone doesn’t understand the market, they probably don’t want to understand the market. They suck at investing, and the market’s natural corrections are their time to shine with “I told ya so!” statements meant for those of us who DO invest and will mostly likely end our careers earlier than them…and with a significantly bigger stash of money than they’ll ever have.

    They are being left behind, and they know that they are.

  2. Steve, I totally agree I just want to try to lift the “veil of ignorance” particularly from my students who I am most worried about. I know you “can’t fix stupid” but it would be nice. And if they get left behind I have to just say c’est la vie.

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