Originally Posted by Propane Goat
I'm not a big fan of the stock market for these reasons:
1. Widespread use of algorithmic trading makes technical analysis mostly useless.
2. Accounting tricks, gimmicks, and flat-out fake numbers make fundamental analysis mostly useless.
3. One scandal after another where the big boys on Wall Street make bank by screwing the small investor and even many big investors: the dot-com bust, Enron, etc. etc. Many of those clowns were even betting against the same securities they were promoting during the housing bubble, thus making money no matter which way the market moved.
4. Massive amounts of printed money, easy credit, bailouts, and financial engineering increase volatility by huge amounts because big firms can ignore risk, they don't have any because it's shifted onto the taxpayers. The problem with this is that your retirement account may not be there when you retire. You notice that during the past few decades we have been lurching from one bubble and scandal to the next.
5. Many large corporations repeatedly look for short-term cost savings in order to meet their quarterly numbers, to the detriment of long-term company strength. Home Depot is a good example of this; when Robert Nardelli was CEO he cut staffing and salaries to the absolute minimum. The numbers got better in the short term, but the company also wound up having the worst customer service of any major retailer, which isn't a good recipe for long-term profitability. When this was going on, I remember seeing a new hire being assigned to the plumbing department...with absolutely no background or knowledge of plumbing.
Anyone is free to disagree with what I've stated here, maybe you have a different take on things and I'd love to hear it. Personally though, I much prefer to invest in assets where I have direct control.
Im curious- What assets do you invest in?
I do think it's smart to have other investments, but I think it would be unwise to not have anything in the stock market as part of your entire financial plan.
in regards to what you are saying, although there is truth to it I think it's still smart to invest in the market-- just dont put all your eggs in one basket--
history has shown that there will be downturns, but overall the market has continued to grow-- I would make a bet that it will continue to grow for as long as we are alive to see it--
There will be downturns, but it always bounces back-- Just be smart with where you invest it and you will be able to recover the downswings--
Now, I'm just talking about someone that is long the market here-- easy invest it and forget it type stuff, like most 401Ks-- if you are smart enough and good about saving some cash for the downswing then you can buy up cheap stocks when markets tank and reap the benefits.
I think its smart to invest in a wide variety of "assets" -- stocks is one of them for sure-