Marketwatch published a scare tactic this week loading up several targets for the average investor to blame when they fail. It’s the typical one-sided drivel that’s heavy on noise and light on help.
By the end, the authors served up Wall Street, institutional investors, high frequency trading, regulations, CEOs, financial advisers salespeople, high fee funds, active managed funds, IPOs, M & A, the SEC, and computers.
Oh yeah. Don’t forget the wealthy. Somehow it’s their fault too:
Stock ownership is highly skewed by wealth and income class, noted Edward Wolff, a finance professor at New York University, in a paper. The top 1% by wealth owned 35% of all stock held by households in 2010, while the top 20% held 91% of the total.
Should it be a surprise that the wealthiest people in this country own most of the stocks? Owning businesses that earn money, either outright or via shares, can make you wealthy. There’s a shocker.
But the authors want you to be overwhelmed by all these so-called obstacles. How did that janitor build an $8 million estate again – some secret insider information and a super fast computer right? Nope. He put his savings into shares of businesses.
It’s funny how that works out – owning things that create wealth, can actually make you wealthy. Go figure. Bonds don’t make you wealthy. Neither do CDs or savings accounts. Businesses make you wealthy.
And you don’t even need to start your own business to take advantage of it. You can buy shares in a business. And if you’re not good at finding good businesses to buy, you can buy a basket of businesses through an index fund. You can even choose a low-cost fund.
Yes, there is a disconnect, except it has nothing to do with Wall Street or all the other excuses offered. It has everything to do with taking the time to learn sound investing principles, with seeing stocks as a business, and with using the biggest advantage every average investor has – time.
Why on earth would anyone try to compete with the second by second speculation of Wall Street? I can’t. You can’t. The average investor can’t. If you play in their pool, you’ll drown.
We can do the one thing Wall Street won’t do. Look beyond seconds and minutes. Think long term.
Last Call
- The Priceless Art of Not Caring – M. Housel
- Bond Math and the Elephant in the Room – Pension Partners
- Diversify Globally To Limit Risk – L. Swedroe
- How Much Foreign Stock and Bond Exposure Do You Need? – Morningstar
- Why Stocks Belong in a Retirement Portfolio – NY Times
- The Financial Perks of Being Tall – The Atlantic
- 67 Short Pieces of Advice You Didn’t Ask For – Raptitude
- How to Ship a Beluga Whale via UPS – Priceonomics
