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The Opposite of a Casino

June 05, 2019


“Investing in the stock market is like gambling at the casino.” 

This line of thinking, in my opinion, is misguided.

In reality, the stock market is the exact opposite of a casino, especially when one diversifies and invests the right way.

It's pretty well known that the longer you gamble at the casino, the higher the probability that the house will take your money. Historically speaking, the longer you stay invested in the S&P 500, the higher the probability you wind up with a positive return.

Just take a look at the range of 1, 5, 10, and 20 year rolling average investment returns for Stocks (yellow):

Since 1950, as the chart indicates there literally has not been a 20 year period that the S&P 500 has lost money, and the range of 5 and 10 year rolling average returns appear less risky than one may expect.

And that's being 100% invested in stocks. When incorporating more conservative assets in a portfolio, there's an even lower likelihood of losing money, evidenced by the charts for Bonds (Blue) and a 50/50 Portfolio (Gray).

The stock market has always and will always be risky, as the range of 1 year rolling average returns indicates. But if you can maintain a long-term outlook, diversify, and educate yourself on key market principles, investing in the stock market can be much less of a gamble.




The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.