Yesterday the Dow hit yet another milestone, 20,000, for the first time. It’s always nice to see record stock levels when they are in positive territory. Since the Dow Jones bottomed out during the Great Recession, the market has been up over 300%. This is an incredible jump in less than a decades time but I saw article that shone light on a problem. A record number of Americans aren’t invested in the stock market at all.
In April 2016, Gallop conducted its annual stock market participation poll and it showed that only 52% of American adults owned stock. Right before the markets bottomed out in 2008, their 2007 survey showed 65% of Americans owned stock. It is obvious that the Great Recession left scars on the psyche of the American public. It is sad to see so many missed out the last 8 years of tremendous market performance.
Any losses that were sustained almost a decade ago would have bounced back in an incredible way if only panic wasn’t allowed to set in. The stock market is a violent machine that has always, eventually, gone up. I understand that past performance doesn’t guarantee future results but we’ve been left with few options when saving for retirement and other financial goals.
The other key piece of information was that young people, 18-34, were invested in the stock market to an even lesser degree. Only 38% owned stocks. To me this is even more disheartening to read than the statistic above. The longer your time horizon the better you can weather the storms that may come and also work the magic that is compounding. I’m curios to see what the results of this years poll will be since there has been steady declines nearly each year since the Great Recession in the stock market participation rate.
At the end of the day, investing in the markets is the best way to save for many things. Especially if your time horizon is at least 10 years in the future like your retirement savings. Riding out the bumps in the road is never easy but in this instance you would have been rewarded handsomely for doing so. No one can predict when the next major decline will occur but hopefully it doesn’t cause the number of people invested in the markets to drop even further.