The New Savage Number: How Much Money Do You Really Need to Retire?

Chapter 8. STOCKS, BONDS, AND CHICKEN MONEY

Don't give up on the stock market! If you do, you are effectively giving up on America. The stock market represents the growth and opportunity of our free enterprise system. The valuation of stock reflects our optimism—or pessimism—about the future. As you'll see in this chapter, over the long run a diversified portfolio of American stocks has been a great investment. And history also tells us that just when things look worst for the country and the stock market, the best buying opportunities are created.

It has been painful to see hard-earned dollars go down the drain in stock market losses. It's one thing to lose profits, but far more devastating to lose the money you invested, when you realize the hard work needed to earn those dollars in the first place. On the other hand, no one ever questioned their growing "wealth" when the stock market was rising.

Being a successful stock market investor requires great self-discipline and a confidence in the future that only comes with historical perspective. It's an old Savage Truth: "The lessons that cost the most, teach the most." The past few years have taught an expensive lesson. But don't learn the wrong lesson from this experience. Don't give up on America and the stock market.

For most Americans, the stock market is the greatest opportunity to grow your own hard work into wealth, by letting your money go to work for you. If you're just starting out, you've been given a great point of entry. ...