STOCK MARKET WATCH -- Friday, 2 June 2023

[progree]

4. Yup, I like money - it provides a comfortable retirement and I can contribute large amounts

to progressive candidates and charities ... My parents did well too and they weren't fancy-pants stock pickers or insiders either.

As for "gambling" -- Nothing holds up as well in the face of withdrawals and inflation than does equities, except perhaps real estate. In other words, it's an even bigger gamble to not have a sizable proportion in equities.



Over the past 20 years, it has grown 6.37 fold, an average annual increase of 9.7%/year
(had the market dropped 60% in 2022 -- a worse crash than any of the post WWII crashes -- then it would have still grown 3.11 fold, an increase of 5.8%/year)

Over the past 50 years, it has grown 131 fold, an average annual increase of 10.2%/year
(had the market dropped 60% in 2022, then it would have still grown 64 fold, an increase of 8.7%/year)

and so on. I'd go to Vegas a lot if I could average these kinds of returns.

This is from the below link, which also has similar for bonds, Treasury bills, and gold. These don't come close to matching the increase in equities.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

And I'm not just cherry-picking the boom periods. The above is inclusive of all periods, down, up, flat.

I see that the above only goes through the end of 2022 (it is updated only annually).

Since the end of 2022 through today's June 1 close (5 months), the Vanguard 500 Index Fund (VFIAX) has gone up another 10.7%. That's an annualized 28.0% rate of return. So if I were to extend the above table out to June 1, all the rates of return in the table would be even better.
https://finance.yahoo.com/quote/VFIAX/history?p=VFIAX
(using "adjusted close" which includes reinvested dividends)

The market periodically sets new all time highs. It has never set an all-time low.

Yes it goes up and down and up and down and ... but the pattern is that new lows are higher than the previous lows and new highs are higher than the previous highs.

What really matters as far as risk is the risk of running out of money in retirement, and that risk is much higher for people who don't have any equities and only rely on "safe" fixed income investments, which don't even keep up with inflation. Innumerable historical simulations in innumerable studies have shown that. IOW its a bigger gamble not to be in the market. I don't wish to take that gamble.

I hate to see my fellow progressives misled by anti-equity JackPineRadicals-style "progressive" malarkey and end up having to live a very financially constrained old age, not to mention having very little or nothing to give to Democratic candidates or progressive causes. And by default having to accept the minuscule interest that the banks usually dole out in savings and CDs and so on.

"If "the house" always wins, then it's less about investing and much more about gambling."

Only a fool gambles with their retirement security -- And it makes DU investors out to be fools because only a fool would wager their retirement security on a gamble. We are not fools. In the face of inflation and withdrawals, it's an even bigger gamble to NOT have a sizable proportion in equities.

58% of American adults own stock according to a Gallup Survey, 3/5/23 https://www.msn.com/en-us/money/savingandinvesting/only-15-of-american-families-directly-own-stock-and-that-s-okay/ar-AA188NL7
pointing to the detailed report at https://www.fool.com/research/how-many-americans-own-stock/

I might point out that "the House" also sells the CD's, money market funds, bonds, and other so-called "safe" alternatives to stocks. Put it under a mattress and it gets eaten up by inflation.

In response to another post a few months ago, from someone who said I don't need the stock market, I can just go to an Indian casino:

I wish someone could tell me which "Indian casino" gives its clients on average a 223% cumulative return over 10 years, a 537% cumulative return over 20 years, a 1,444% cumulative return over 30 years, a 6,759% cumulative return over 40 years, a 13,016% cumulative return over 50 years, a 33,400% cumulative return over 60 years, and a 120,090% cumulative return over 70 years, because I sure would like to "gamble" there. The equity market is AN INVESTMENT.

What drives the market is earnings (not "luck" or the pull of a slot machine handle ). This from Peter Lynch in 2001:

Since World War II, despite nine recessions and many other economic setbacks, corporate earnings are up 63 fold and the stock market is up 71 fold. Corporate profits per share have grown over 9% annually despite the down years. Nine percent may not sound like a lot but consider that it means that profits mathematically double every 8 years, quadruple every 16, are up 16 fold every 32 years, and are up 64 fold every 48 years."

This from a post in another forum by a former advisor
"The best option is to use mutual or exchange traded funds, frankly. Picking individual stocks is typically not a good idea for the average investor"

I agree and would even go further -- given the much higher volatility of most individual stocks compared to broad-based funds -- investing in one or two or half a dozen stocks is pretty close to gambling for anybody at my (Progree's) knowledge level or less. That's why virtually all my equity investing is in broad-based mutual funds and ETFs.