Stock market facts

When it comes to the stock market, I am an unabashed optimist. This is true about most things, I guess. I think back to what Eddy Elfenbein said a few months ago:

I am always an optimist. I think we are going to have a very robust stock market. I think there are going to be tons of innovative companies that will bring us lots of new toys to play with. I think people will live longer and they will be healthier, and I think it will be a more peaceful world. I think the market is a great place to be and will continue to be a great place to be. The free exchange on the market is one of the great inventions in human history.

A lot of people view investing in the stock market as if you are investing in a thing, or some non-living corporate entity. But what you’re actually investing in is people and ingenuity and progress and hope.* When you invest in something, you are giving your money to people in the hopes that they will make something better. And humans have gotten very good at making things better.

*A company is sorta like a car. Like, I look at a car and I don’t normally think of a person behind the wheel. I just see some big scary machine that is whizzing towards me. The same goes for Apple or Google or Facebook. There are real people behind the machine.

Anyway, here are some market facts, with all bias removed. I’ve gathered these from a wide array of financial sites over the last few days.

– In the last 89 years, stocks closed at least 20% lower six times.

– In the last 89 years, stocks closed at least 20% higher thirty-five times.

– Since March 2009, the S&P 500 has more than tripled. It has gone from 666 to 2090, about a 21% annual gain over six years.

– Apple IPO’d in 1980 at $22. If it had never split, today’s price would be $6,776. This week, it became the first company to surpass $700 billion in market cap.

– More jobs were created in 2014 than during any year since 1999.

– US household net worth hit $81.5 trillion. This includes all stocks, bonds, properties and business values, minus any debts or liabilities. This is a new all-time record.

– US energy consumers have received a cumulative $14 billion tax cut (and counting) as a result of the oil price decline since June.

– We won’t know until the CPI report comes out, but the S&P 500 may have reached an all-time inflation adjusted high today.

The stock market is a crazy, confusing, unsettling world for many people, and that’s especially true if you track its day-to-day movements. And, yes, it can drop at any time. It doesn’t take much to send investors into a panic. But on the whole, it is a remarkably efficient vehicle for returning long-term wealth.


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