The “Golden Age” Of Traditional Stock Market Investing is Over.
If you invested in the mid 1950s… during the “golden age” of the markets, you’re probably wealthy. Plugging your savings into a market index fund after WW2 and letting the market run its course would have been a sufficient retirement strategy 70 years ago.
But what about today?
Today, markets are at all-time highs, controlled by supercomputers and software algorithms.
Flashy new investment products are hitting the market every week. Apps and tech startups are taking “investing” to the uneducated, financially illiterate masses. It’s changing the game.
Here’s a key investing principle:
Successful investment returns are created by market inefficiencies. If you buy an asset (like a stock, or real estate) when it is undervalued, and sell it when it is properly valued (or overvalued), you’ll make a profit.
The problem is that Wall Street has become so systematized, regulated and shrouded behind the algorithms of supercomputers, that there is very little inefficiency for the average investor to exploit.
You merely put your money in the pool and hope for the best.
Wall Street has become a very efficient marketplace. What does this mean for the future of traditional investing?
It means a plateau in returns.
In the worlds of Jack Bogle (founder of Vanguard):
“By decade's end… I expect an annual rate of return of 4% for the U.S. Stock Market.”
That’s not an inspiring possibility. 4% barely outpaces inflation.
Bottom line… the “Plug-And-Play” market strategies of the 1900s aren’t going to yield the results they used to. Many “consumer” investors are still working with decades-old assumptions and strategies.
Today… Successful investors are leaving the consumer driven investing marketplace in droves, opting instead for investments in inefficient markets (like real estate) that offer more control.
The future of wealth-building will belong to those that have the network and connections to access true market inefficiencies.
That’s why I truly believe that your network is your net worth.
What about you?
-David
P.S. – My team is putting the finishing touches on a really exciting project.
It’s for dentists that are committed to adapting to the new era of investing and wealth-building, but still getting some fundamentals squared away first (like growing a new practice, paying off student debt, etc). Want to be the first to know about it? Click Here.
