thanksgiving

Small Investors: Rejoice and Be Thankful

After a year of turmoil and chaos, Thanksgiving is right on our doorstep. Many people are unemployed and many more are struggling to make rent every month. Lockdowns are happening again, and small businesses are taking the brunt of it. The economy has a long way to go before it completely recovers.

But don’t tell the stock market that.

Even with all of this going on, stocks are still going up. Just yesterday the Dow Jones Industrial Average hit 30,000 for the first time in history. Now you may be thinking, “Great. The rich get richer while the working-class folks are SOL.”

True, the rich are getting richer. Billionaires saw their aggregate net worth increase by $500 billion during COVID.

That doesn’t mean working-class people can’t get a piece of it.

Grab Your Piece of Pumpkin Pie

I’m an adamant believer that everyone should be investing in the stock market. Everyone.

As Banker on FIRE puts it, the stock market is a “magic money-making machine.” If you put your money into it and leave it there for many, many years, you’re going to make money. It’s that simple.

It’s Thanksgiving dinner, and the stock market is the pie. Your grandparents are eating their piece, and your rich uncle is going in for seconds. Time for you to grab your piece as well–as long as you have room on your plate.

A Small Piece is Better than a Big Piece (in a few ways)

For all those people that say investing in the stock market is only for the rich, you’re wrong. Through index funds and online brokerages, investing is accessible to everyone.

In fact, small investors have many advantages that institutions wish they had. These advantages include:

1) Higher Agility

The biggest advantage small investors have is the ability to change quickly. If you don’t like the stock you picked, no problem. Just sell it. If you want to put your money into a certain stock right now, you can do it.

The big guys aren’t so lucky. When you own millions of shares, you can’t just sell everything immediately. Doing so would drive prices down further and further until you single-handedly run the stock into the ground. And entering a position can take days. They have to approve it with their bosses who then approve it with their bosses–a whole bureaucratic mess.

When you invest for yourself, you can move money around whenever you like.

Note: this is not permission to buy and sell at the drop of a hat just because you can. Pick a strategy and stick to it.

2) Less Pressure

Being an individual investor also comes with less stress. Big-name investors have hundreds or thousands of clients. These are real people that put their trust in the hands of these investors. Institutions have to measure themselves against certain benchmarks or they will lose clients. Imagine how stressful that must be.

As a single investor, you have no one looking over your shoulder. No obligation to report results. No pressure at all.

Institutions have this monkey on their backs all the time. This pressure can lead them to take on a less-than-ideal strategy.

This leads me to my next point…

3) Long-Term Outlook

Individual investors are investing for the future. Not for next week or next month, but many years into the future.

Hedge funds invest for the next quarter. They are required by law to report results every three months. If their performance doesn’t pass the smell test, their clients are walking. This leads hedge funds to take on a short-term time horizon.

By thinking many years into the future, you have the advantage. You don’t need to spend night and day looking for the next hot stock. You can buy great businesses and just wait.

It’s time that makes investing a successful venture. The more time you have, the more money compounds.

Be Grateful and Give Thanks

Once you’ve had your slice of pie, you’ll understand why people can’t stop eating it. Investing is fun, and it helps to create a better future for yourself and your family. And you don’t need to be a millionaire to start. Get started as soon as you can.

No matter how rough your life has been, there are always good things to be found. Be grateful for all of the good things in your life. Give thanks to all of the people who have helped you along the way.

Happy Thanksgiving!

Featured photo source: Element5 Digital on Unsplash

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