Tackle Today: The scars of 2008 keep investors out of stocks
September 21, 2018
≈ Don’t let fear lead to ignorance. ≈
Coach Matt found an amazing survey from Betterment where the investment firm asked investors about their attitudes, risk tolerance, investments and perceptions of the market since the financial crisis of 2008. The entire survey was fascinating. You can read the whole thing here.
Some of the key takeaways were that only 10% of respondents said they invest more today than in 2008. 66% of the survey respondents said they invest less now than in 2008.
Meanwhile, the market from bottom to top has gone from $66 on the SPY to over $293 from the bottom to the top (which was hit this week).
Respondents, by and large, expressed less trust in the market and is investing less on average.
This fear of losing and ignorance about investing leads to them missing out on the gains that come from the bullish market conditions that we’ve seen for the last 10 years.
Where does this ignorance come from? It could be a lack of information or education. 48% of people who responded to the survey did not think the S&P 500 was even up over the last 10 years. They weren’t aware that stock prices had been rising for a decade.
You’ve probably heard of the fear of missing out (FOMO), that’s apparently not the reason that most consumers have missed out on the bull run. They simply aren’t aware of what is happening. They have the ignorance is bliss mindset (IIB).
This type of information is staggering to investors. When you talk about the stock market to your friends, they probably show disinterest, or even worse, they tell you that you shouldn’t pay attention.
Not paying attention has led most people to missing out on the huge bull run, missing out on building their retirement plan and left them without a real plan moving forward.
The next time someone in your life tells you that you shouldn’t invest in stocks, remind them that the widening gap between the Rich and the working class is mostly because of investment performance across asset classes. As the Investor class makes great long-term gains, the working class misses out, doesn’t pay attention or even get education about what’s happening in the markets.
Knowledge truly is power.
Chart of the Day
CONSUMER FINANCIAL PERSPECTIVES REPORT
The table above shows that only 10% of respondents to a recent betterment survey invest more than they did in 2008. 66% of respondents say they invest less. Over 60% of the respondents lost less than $10,000 from the financial market’s crisis in 2008.
Video of the Day
Tackle 25: Covered Calls
The covered call is the financial markets version of the real estate rental agreement. Whereas in a rental agreement the investor will find a property to invest in and create monthly cash flow through renting out the property.
Today’s Lineup
OPTIONS THEORY
How to Be Wrong and Still Make Money – EEM Edition
Is there anything more satisfying than being wrong, yet still making money? No sir! To illustrate how such a feat is not only possible but probable (with the right management techniques), I’m starting a new series here at the Options Theory blog. The title will be as you see it above “How to Be Wrong and Still Make Money.
Coaches Lounge 11am EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cashflow Club Replay
If you missed last night’s episode where Coach Tyler talked about How to *Almost* Sell Naked Options in an IRA or would like to watch it again, check it out here.
Halftime Report 12:30pm EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Market Recap 4:30pm EST
The Market Recap is designed to give you a quick overview of the day that was. While brief, this report is designed to cover all of the major events that drove the markets that day and help you plan for the trading day ahead.
