Lilly Kazaz
Dec. 10, 2021
As a portfolio manager for the past 25 years, I’m often asked at social gatherings about investing. Although I don’t mind such questions, I now have more sympathy for doctors who end up diagnosing everyone’s aches and pains when they find themselves outside their medical offices.
For some time now, I have taken to conducting my own mini-survey by responding with a question first: “How do you perceive the stock market?”
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As you can imagine, the range of responses is wide. Terms such as gambling, scary, risky and not for me are quite common. There are certainly many other people who have a more reasoned and fact-based view of equity markets, but the negative perception many hold is keeping them from reaping the benefits that investing in quality public businesses can bestow.
It’s important to reframe the perception of equity investing in order to give those who are unknowingly in need the perspective required for success.
Almost everyone who has achieved lasting wealth and financial security in their lives did so through ownership of a productive asset, most often real estate or a business. If you look around, the wealthiest people you know likely made their money or inherited their money from a private business.
The equity markets provide us all with the ability to be business owners since you can start with as little as $500. Businesses are innovative, making them more unique than other major asset classes. Look back 20 or 30 years, and ask yourself what products and services we take for granted today that did not exist back then.
Publicly traded companies have been, and will continue to be, at the forefront of innovation and creation in our society. From the pacemaker, heart stent and defibrillator that save your life to communication technologies that connect families globally and warn us of storms, thereby also saving thousands of lives annually. And from food and agricultural technology to help feed the world more efficiently to airbags and automobile design technology that reduce the number of fatalities on the road. Let’s not forget that many cancers are now diseases we die with, instead of die from, and there are many more cures currently in development.
As in the past, technology, innovation and highly motivated and awe-inspiring people and businesses convince me that the global businesses we can access through the stock market will be the ultimate solution providers to the challenges society faces today. Climate change is the next big one, and will be addressed by the innovation and creativity of those toiling away within companies.
The stock market should not be viewed as some mysterious entity fraught with risk, but rather the innovative creator that it is, and has been, in virtually every sector of our lives. To not understand the long-term benefits and not participate in what historically have been excellent financial rewards, is in my opinion, a greatly missed opportunity.
