> "Vast Majority of People Who Invest Inevitably Lose Money". Yep. That's always held true.
I don't think that's true, otherwise people wouldn't pile so much money into stock funds in their 401ks.
I don't think that's true, otherwise people wouldn't pile so much money into stock funds in their 401ks.
Commodities and currencies (including crypto currencies) are not cash flow producing assets. There's no value in them that can't be accessed immediately, so no one's going to sell them to you for less than their long run worth.
People who buy a small number of individual stocks end up in a different situation. While their average return is positive, those results have a large degree of skewness (meaning most stocks stagnate or fall, but the meteoric rise of those that do well makes up for it on average). If you picked a random stock in 1992, you'd quite likely have lost money by now.
This same crowd gets interested in Bitcoin at every ATH because of the news coverage. I got so many people asking me how to buy Bitcoin when it hit 20k in 2017 and 60k in 2021. That's when the vast majority of people buy.
Yes, if you put money in your 401k and don't take it out until retirement you will make money. That doesn't describe the vast majority of investors though
Doesn't it? My mother did it that way. Made regular payments into her selected cooperative low-risk mutual fund that built up a reasonable retirement pension. I know a lot of people that do that. I suppose the difference is that they don't think of themselves as investors.
I think you have a skewed view of the average investor. About 58% of Americans own stock, but only 35% of Americans own any outside their 401k. That means 40% of investors only have money in their 401k. I couldn’t find the numbers for how many of those investing outside of their 401k just owned index or mutual funds, but I even if it was only a small percentage it would mean a majority of investors aren’t buying individual stocks.
There is a vocal minority who invest speculatively. It makes sense that this number would seem larger than it actually is, because they are the ones who talk about investing. You don’t see questions or posts from people just investing in their 401k and index funds, but there are more of them than the speculators.
https://news.gallup.com/poll/266807/percentage-americans-own...
https://www.pewresearch.org/fact-tank/2020/09/25/few-in-u-s-...
e.g. if you are very loss averse, you don't buy lottery tickets at all. You don't just buy the safest ones where you expect to lose the least.
e.g. lottery winnings are also affected by inflation.
There is nothing in need of rewrite. The original claim was about money, not currency. As money is defined as the assets, property, or resources owned by someone (i.e. wealth), we can substitute currency with any other asset. Let's use cars, as is convention, and works well as they tend to decline in value much like currency does.
So, you trade your car for a security. Some years go by and you decide you want a car again, track down the guy who you sold your car to, and offer to trade the security back for the car. He agrees and now you've got your car back. You didn't lose any cars. You are back to one car, just like you had originally. However, the car is scratched up a little, needs new tires, etc. and as such isn't worth as much as it was when you first traded it. And so, while you haven't lost any cars, you have lost money. The car isn't what it used to be; your wealth has declined.
You might not lose any currency in an exchange of assets, you might even gain currency in the deal, but that doesn't necessarily mean you haven't lost money.
Cash is the easiest investment to hold. If it were stable it would be very attractive, but it is not. The monetary system works hard to ensure that it isn't stable, with mandated targets to ensure that cash holdings lose money every year.
i.e. iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money. The fact that dollars have also lost value during the same time means you've lost more money, not less.
I said no such thing...?
> iff your security is worth fewer dollars than it was worth some period of time ago, it is losing money.
And if it sells for more dollars than in the past, but not commensurate with the decline in value of those dollars, then you've still lost money. Less money lost than would have been by holding dollars, but still a loss.