At the 21st Annual Investment U Conference at the beautiful Vinoy Renaissance in St. Petersburg, Florida, last month, I talked about the historic bull market of the past decade – and how tens of millions of investors missed out.
Gallup reports that the percentage of households owning stocks – either directly or through a fund – has declined from 65% in 2007 to less than 55% today.
With young people it’s even worse. Only 38% of millennials own equities.
In January, in fact, money market assets reached an all-time high: $3.1 trillion.
How have Oxford Club Members and others gotten so much richer over the last 10 years while most people have missed the boat entirely?
There are a few reasons. One is the appalling lack of financial literacy in this country.
Kids graduate from high school – and often college – with only a vague understanding of how our free market system works or how stock and bond markets allow essentially everyone to earn higher rates of return.
Yet even among those who understand investment fundamentals, relentless media negativity often keeps them out of the market.
In a column last week, I noted that the national media gave generous coverage to the housing bubble, the financial crisis, the ensuing stock market collapse, the Great Recession, the “flash crash,” the downgrading of U.S. Treasurys, the Greek default, the rise of the Islamic State (ISIS), the collapse of oil and gas prices, and the drawbacks of Brexit.
But how about the many positive factors that drove stocks to one record high after another – not just for months but for years?
I’m talking about low inflation, rock-bottom interest rates, cheap energy, a stronger dollar, rising corporate profits, record corporate profit margins, historically low unemployment and an expanding economy.
Those got short shrift or were reported with a hasty “Yes, but…”
When the media paints our era as a terrible place at a horrible time, it’s no wonder the vast majority of Americans polled say the country is on the wrong track, our children face a diminished future and the world, in short, is going to hell in a handbasket.
If I felt that way, I wouldn’t risk my hard-earned money in the stock market either.
Yet the reality is that Americans today are living longer, healthier, safer, richer, freer lives than any people in history.
(Yes, there was a slight downtick in American life spans recently due primarily to the opioid crisis. But American life expectancy is increasing by three months a year.)
How do you break free of the distorted perceptions created by the dark prism of the national media? After all, you have to get your newsworthy information somewhere.
I’d start by giving a miss to social media, talk radio and the inflammatory editorialists on the cable news networks.
Try to make sure that your perspective is always rational, balanced and grounded in the facts.
No single column is going to change anyone’s worldview, of course. But there are plenty of excellent books that can do just that.
First on my list is Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Harvard psychologist Steven Pinker.
Beyond that, you would benefit greatly from reading these:
- Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think by Hans Rosling
- It’s Better Than It Looks: Reasons for Optimism in an Age of Fear by Gregg Easterbrook
- The Rational Optimist: How Prosperity Evolves by Matt Ridley
- Abundance: The Future Is Better Than You Think by Peter Diamandis and Steven Kotler.
Of course, even after you polish these off – and you should – you will be subjected to more Chinese water torture, as the national media drips a little more bad news on you every day.
That’s why Nicholas Vardy, Mark Ford, Mark Skousen and I are here at Liberty Through Wealth, to remind you that we don’t just live in a world full of problems, but in one full of opportunities… at least for those willing to work, save and invest.
Critics argue that the problem with reading our opportunity-oriented take on the world is that the effects don’t last.
Neither does bathing. That’s why we recommend it daily.