Trust the Stock Market Like You do Wikipedia

Written by: David Wilkening

Stock market. Stock market. Stock market.

Similar to the mantra about location in real estate, that’s the repeated word when the subject of investments is raised. I am far from alone, however, in thinking this is an insider’s game: rigged against the small investor like you who is bereft of what might be called “insider knowledge.”

The small guy or gal does not stand a chance.
Now as a journalist, I am open to hearing the other side. And a site called Bite the Bullet Investing wants you to know I am wrong. I’ll skip their acknowledgment about the crooks such as moviedom’s Gordon Gekko. Despite that, there is an argument that little guys have a chance to do well in the market. And they even have advantages over the big investors, (believe it or not, and I don’t)

The site makes the point that there are Blue Chip stocks that have paid dividends every year for at least the past 25 years. These stocks have actually increased their dividends for the same time period. If you don’t believe it, check Wikipedia (are they kidding here: even first-year journalism students know enough to suspect long-discredited Wikipedia even though it has cleaned up its act).

The site admits that dividends are small, however, and that the stock list changes each year. So investors have to pay attention. Also: it’s boring, “like watching a tree grow.”

The site argues that they are those of us who disparage the market are referring to active trading. Which is buying and selling regularly, and not day trading. The later is not investing for several reasons, including the fact that it takes long hours of work to succeed.

Wall Street insiders like the rest of us are overwhelmed with information. So they take shortcuts.  And they follow the herd. When a stock goes up, they go along with it because of the reaction of others. So that way, stocks are pushed too high or too low.  Apple is a good example.

So here’s your advantage, according to the site. You can go against the “insanity of the herd.”

So the writer confides that he knows several individuals, little guys in this argument, who have done extremely well with stocks, because they are not greedy and they are patient.

This is also what we argue are real estate advantages, of course.

“Start with dividend aristocrats and see what other companies are doing well. Share in their growth and their profits. Do some research. It’s fun, educational and, above all, profitable,” the site says.

I don’t buy the argument. For one reason, company management at stock companies is beyond your control, to cite just one obvious example.

I will stick with real estate because at least it’s a tangible investment or something physical that is here and now. It is also something you can control with your own actions by altering it, hopefully for added value. Unfortunately, you can’t do that with stocks.

Wikipedia, indeed.


Trust the Stock Market Like You do Wikipedia

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