Comment by dan-robertson
2 months ago
I don’t think this is the right analysis. One should generally expect a positive return over time from investing in equities: you are giving up money now and taking on risk, and you are compensated for it by the return on investment. The word ‘speculating’ is generally referring to a different kind of activity from the kind of investing a typical person gets through paying into a pension. I don’t want to make claims about what typical people are doing with brokerage accounts, and the structure of brokerages seems to have changed enough that it’s perhaps harder to describe long term trends or the lives of ‘typical’ customers.
Fair point. There’s a real difference in attitude between speculation and saving. Most people buy stocks to save for retirement, not to speculate that they’ll have enough money for retirement.
But most people aren’t investors, either. Typical people buy stock for their returns, not for their productive capacity. My point is that’s speculation.
Most people have a speculator’s mindset. They would be happy to make a windfall on the market. For example, who wouldn’t be happy to own a plot in downtown Detroit before an economic boom raised land prices? Or stock in a startup before an established company announced they would acquire it?
Although someone who puts money in the stock market for retirement may intend to save money, since a 401k seems like just any another asset, but it’s quite different from other assets: Bank accounts fund lending to companies for productive investments. Homes provide a residence. Bonds provide money to countries and companies for investment. But when individuals put money in the stock market, it’s because they hope the asset will appreciate.