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Stock Market

Investing in the stock market has always been an effective way to build wealth. In fact, it’s consistently proven to be the most effective wealth generator over the long term.

And, with persistent inflation an ongoing issue and the Federal Reserve poised to cut rates sooner rather than later, investing in stocks may be one of the few places investors will be able to generate consistent, inflation-beating returns for their savings.

Of course, stock market investing comes with more risk than a safe, low-yield savings account. Inevitably, not all of your investments will be winners.

In investing, no one really knows for sure what’s going to happen. Over time, however, stocks tend to rise. History tells us this. Since 1928, the average annual return in the S&P 500, the benchmark U.S. stock index, is 10%. So historically, a well-diversified portfolio of stocks should allow you to just about double your investment once every seven years.

Now, there are periods where returns in the stock market underperform the average. Every few years we encounter corrections and bear markets, as we did in 2022 and 2018, and the years after the Great Recession and dotcom bust.

But over a longer time horizon, those off years are more than offset by the performance in bull markets. If you invested in the S&P 500 at the beginning of 2014 and simply held that investment, you would have weathered the 2018 correction, the pandemic sell-off, and the 2022 bear market. And you’d have generated 16.5% annual returns.

You wouldn’t think that, with a correction, a pandemic and a bear market, the last decade would be anything to write home about, but those numbers speak for themselves. Despite the fear and negative headlines, investing over the last 10 years has beaten the historical average by more than 50% each year.

But, of course, your return would have depended on what stocks you actually bought. Take General Electric (GE), for example. GE is an iconic American company. As recently as 2009 it was the largest company in the world.

But had you bought GE at the beginning of 2014, you would have lost 0.7% every year, and that’s assuming you reinvested your dividends. Without dividend reinvestment, your returns would have been even worse.

That kind of unpredictability scares some people away from investing in the stock market. The track record over time should be enough to convince you otherwise.

The stock market is a vast and ever-evolving place, and there are many ways to approach stock market investing.

Want to invest in safe companies that offer a steady stream of income? You’re probably a dividend investor.

Are you willing to take on a bit more risk to go after bigger, faster rewards? Growth investing is likely for you.

Value investing is for investors who like to bargain shop.

Options trading is for those who like to invest based on statistical probabilities. And so on.

At Cabot Wealth Network, we have something for every investor. Our investment advisories cater to a variety of risk tolerances and timetables, depending on your preference. Since 1970, we’ve been helping investors of all experience levels achieve market-beating returns, helping our readers double their money more than 30 times over.

When done right, investing in the stock market can be a hugely profitable endeavor. For more than a half-century, we’ve been helping investors maximize those profits—and hope to continue doing so for another 50 years.

Stock Market Post Archives
This list of the best investment sites to research stocks aims to help individual investors navigate the sea of stock-related information.
Market truisms don’t offer specific advice for every market, but there is broad value in using them to rethink how you invest.
Relative Performance (RP) measures how a stock is performing relative to a specific index and is a good sign of strength or weakness.
Averaging in the stock market is when investors gradually increase the number of shares they have over time, in their best stocks.
Buffett, Druckenmiller ... Kitty? Do Roaring Kitty (Keith Gill) and Nancy Pelosi belong on the list of the greatest traders of all time?
Bond terminology varies from the stock terms you may be used to, but if you’re buying individual bonds this is the terminology you should understand.
Figuring out how often you should check on your stocks is the difference between responsible portfolio management and needless worry.
Investing in monopolies is a good way to make money. But it can be difficult for U.S. investors. Where to find them? Start overseas.
What is an ETF? An exchange-traded fund, is an investment fund comprised of multiple different investments such as stocks, bonds, and commodities.
As the market continues to set new all-time highs it’s important to remember the prescient quote from Jesse Livermore: “Markets are never wrong, only opinions are.”
Managing your own retirement portfolio is easier than ever, but is it a good idea? Here are the facts you need to make the right choices.
If accurately identified, the double bottom chart pattern can signal a fortunate entry point for investors. Here is how to identify it.
Thomas Phelps wrote a book called “100 to 1 in the Stock Market,” touting a strategy that can bring you profits of 10,000% or more in stocks.
There has been a flurry of reverse stock splits of late. Are they good for investors? Traditionally no. But there are exceptions.
Using stops is a common method for selling stocks. But what’s the better method: mental stops or stop-loss orders?