Since the Great Depression, the stock market has appreciated at a higher rate than the real estate market.
The Great Depression happened between 1929 and 1939. This was a period of great economic hardship, all over the world.
Consider two people, the first person purchased blue-chip stocks in 1940. The other purchased prime real estate of the same value also in 1940. Considering that the two people did not sell their investments, presently, the one who invested in stocks is richer than the one who bought property.
Buy and Wait
According to Warren Buffet, one of the richest Americans alive and the most successful stock investor on earth, you should not wait to buy stocks. Instead, you should buy and wait. This is the golden rule of investing in stocks.
In the long run, stocks always appreciate. That is why is why they are a good store of value and preserve of wealth. Stocks are the asset of choice when it comes to retirement investing. Nowadays, there is online stock market trade. This makes it easy for anyone to buy and sell shares from the comfort of home or office.
What Else Does Warren Buffet Have to Say about Stocks
Warren Buffet is the stocks guru. Stock investors consider his words as pure gold. The advice from Warren Buffet always makes sense.
Another piece of advice from Warren Buffet is that you should invest in stocks that you understand. If you are a medical practitioner, you are in a better position to understand medical stocks. On the other hand, a tech person will easily understand technology stocks.
Economic Indicator
The stock market is an economic indicator. It plays an important role in the national and the global economy.
When there is a bull market, the economy will perform well. A bearish market is not good for the economy. When many people are selling their shares, that means that they do not have faith in the stock market and as a result, they do not have faith in the economy.
A stock market collapse will lead to an economic collapse. The collapse of one stock market will have a domino effect. When the Hong Kong Stock Exchange collapses, the London Stock Exchange will likely follow suit and by the time the market opens in New York, it will already be a bad day.
The Bottom-Line
The central bank controls the inflation rate through interest rates. On the other hand, the stock markets dictate recession rate. If the stock market sheds many points for a number of days, the economy is likely to go into a recession.