This post is to welcome all new members who joined us in the last few weeks. The information below is old news to existing members; we are confident that new members will find it revealing.
First, glance in the chart below.
For over 100 years, global equities (the stock market) have given investors the best returns. From 1802 to 2012, that is, for over 200 years, US stocks have done even better. They averaged a 6.6% annual real return. (Siegel, J. J., STOCKS FOR THE LONG RUN)
$10,000.00 invested in the current bull market that started in March of 2009 has grown to an effortlessly earned $40,000.00. One million has grown to four million!
Then, why the title of this post, “Wall Street is not your friend.”? (Bay Street in Canada)
Well, very few investors do as well as the market. Monday Morning members do. (See below.)
A study conducted by Prudential Financial in June 2011 showed results that were fully expected by the knowledgeable but surprising to most. One thousand people were asked two questions.
Question 1. What is your current perception of the stock market?
|There are still benefits to investing||42%|
|I’ve lost faith in the market||58%|
Question 2.When are you likely to put more money into the stock market?
|Within a year||25%|
|Over a year from now||31%|
Sitting in a savings account, that $10,000 or one million has gone practically nowhere while the bank used that money to lend out for a lot more than it gave depositors.
The list of reasons why so few investors match market growth is a long one, but it can be summarized in the statement that Wall Street is not your friend. The conflict of interest between Wall Street and Main Street is enormous. One-half of Wall Street income comes from investor trading. Understandably, they encourage it in every way possible. Trading is a losers game for investors.
So how do Monday Morning members participate in stock market growth? Will it continue to grow at its historic rate?
Two important reasons for recent market growth are the current low interest rates and the billions of dollars pumped into the economy. That money goes where it is treated best, which is the stock market. Will the low interest rates continue?
Federal Reserve Chair Jerome Powell told Congress last Tuesday (February 17) that the economy is “a long way” from the central bank’s goals and policymakers have no plans to raise interest rates.
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