The Savage Truth on Money, 3rd Edition

CHAPTER 6The Savage Truth On The Stock MarketIt’s Less Risky Than You Think

The stock market is not a casino or a game of chance. It is a reflection of our huge economy (and the global economy) and of the prospects of the business you work for, and all the businesses that provide jobs and products and services for consumers. You don’t have to become an expert at picking which stocks will do well, or take a lot of risk to find the next Apple or Amazon. But if you’re going to make decisions about your retirement plan at work, or even buying a few shares of stock, you owe it to yourself to understand a bit about how the stock market works.

Perspective is critically important when it comes to stock investing. Like the seasons and the moon and many other forces of nature, stocks move in cycles. But despite many efforts to chart past performance and predict the future, those cycles are never easy to identify—especially at tops and bottoms. Near the top, investors are overwhelmed with optimism about business, the economy, and the stock market. And the bottom is always marked by despair over those same factors.

I intend to make the argument that if you believe in the future of America—the country where you intend to live, work, retire, and hope to watch your children and grandchildren grow up—then you must invest sensibly in the stock market for the long run. You don’t have to become a stock market expert to invest successfully. And you don’t have to start with a lot of money.

Critically ...