How Wall Street Parasites Have Devoured Their Hosts, Your Retirement Plan and the U.S. Economy

[progree]

47. I guess my parents and I have been serial lottery winners for decades.

Last edited Thu Sep 3, 2015, 08:56 AM - Edit history (2)

As long as one buys and holds for the long run widely diversified LOW COST stock funds.

That's the historic experience going back a century. And my parents and my experience -- almost all our innumerable funds have done better than CDs or bonds. So we're serial lottery winners I guess.

But oh well.

[font color = red]On Edit, 9/3 848a ET:[/font]As for the lottery analogy, the odds are stacked against lottery ticket buyers -- on average lottery ticket buyers only get back 75 cents or something like that per dollar put in. Whereas on average U.S. stock investors get a rate of return averaging a positive 9%/year -- doubling one's investment on average every 8 years. Because it is based on corporate earnings. I'm for any "lottery" that is based on corporate earnings and has the track record of the U.S. stock market.

There's another kind of gamble: outliving one's savings. A much bigger likelihood if one is investing in CDs and bonds than in stocks. Innumerable studies show that. That's the lottery I'm concerned about losing. I want the odds in my favor.

There was the famous Peter Lynch / Fidelity ad that I remember seeing. Well I googled this and found this from 2001:

http://www.rbcpa.com/peterlynchcommentary20010920.pdf

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."

I just can't understand how some DU types can complain about how corporate profits are an ever-bigger share of the economy (while wages/salaries are an ever-declining share). And how profitable the corporations are blah blah blah. And then in another post they will say I'm way too smart to invest in the stock market.

Well, the stock market is investments in corporations, and earnings (profits) drive share prices and provide dividends.

And as my last post explained, the S&P 500 is 75% of the U.S. stock market -- not some small lucky set of stocks or a hot sector or two. A Total U.S. Stock Market fund -- consisting of small and mid-caps as well as large caps -- would have done even better, but there isn't such a fund that goes back that far, so that's why I use the S&P 500 fund.