Growing up a half mile South of Bug Tussle the old timers could remember the crash of 1929 and our parents remembered the Great Depression as children.
The stock market was considered a form of gambling, something vaguely sinful like women who walked around town on foot instead of riding in cars, and drinking booze and beer and wine, and other legal things that we knew weren’t something you’d brag about doing in church.
But just over forty years ago in law school in my estates and trust administration class my professor taught us in the middle of a really bad recession, that the reason the rich get richer and the poor get poorer is the poor don’t invest a tenth of their income in a broad based mutual fund in large cap American stocks. He went over the average returns for all investments and over a long period of time none came close to the Dow Jones Industrial Average.
He said in front of the class, a whole lot of people have lost a whole lot of money betting against the United States of America.
The rich allow you to buy shares of the large businesses that make them rich, he said. The Dow was a thousand then but he said in a few years it would be two thousand and after a few more three thousand, and over time it would be ten thousand, twenty thousand, there was never a limit.
Here’s a chart with yearly Dow information back to 2015.
Today the Dow closed over 37,000.
When my law professor made his speech there’s been three times inflation, which would mean a three thousand Dow today instead of the thousand it was then, to match inflation.
The real return is twelve times that.
Plus those stocks have paid dividends since late 1982.
That was the best advice I ever followed and I’ve advised all my clients to follow for forty years.
The hard part is you have to buy when it’s 2008 and not sell during the fat years.
And you can’t listen to the experts who know the market will crash next year or they have a stock sure to make you rich.
Easy and steady and consistent investment is the only way to play the Dow.
The stock market was considered a form of gambling, something vaguely sinful like women who walked around town on foot instead of riding in cars, and drinking booze and beer and wine, and other legal things that we knew weren’t something you’d brag about doing in church.
But just over forty years ago in law school in my estates and trust administration class my professor taught us in the middle of a really bad recession, that the reason the rich get richer and the poor get poorer is the poor don’t invest a tenth of their income in a broad based mutual fund in large cap American stocks. He went over the average returns for all investments and over a long period of time none came close to the Dow Jones Industrial Average.
He said in front of the class, a whole lot of people have lost a whole lot of money betting against the United States of America.
The rich allow you to buy shares of the large businesses that make them rich, he said. The Dow was a thousand then but he said in a few years it would be two thousand and after a few more three thousand, and over time it would be ten thousand, twenty thousand, there was never a limit.
Here’s a chart with yearly Dow information back to 2015.
Today the Dow closed over 37,000.
When my law professor made his speech there’s been three times inflation, which would mean a three thousand Dow today instead of the thousand it was then, to match inflation.
The real return is twelve times that.
Plus those stocks have paid dividends since late 1982.
That was the best advice I ever followed and I’ve advised all my clients to follow for forty years.
The hard part is you have to buy when it’s 2008 and not sell during the fat years.
And you can’t listen to the experts who know the market will crash next year or they have a stock sure to make you rich.
Easy and steady and consistent investment is the only way to play the Dow.
