Is investing in the stock market like gambling?

by Erik Garcia

Attending my first in-person conference post-pandemic in Las Vegas felt almost normal. Osaic Wealth did a fantastic job of hosting over 3200 financial advisors in the midst of what hopefully are the waning days of the pandemic.

Here are 8 takeaways from the conference:

1. Investing ≠ Gambling

When I visit Vegas, I am reminded of all those comments I hear from people, “Playing the stock market is like gambling.” This is what I think about that:

2. Next time, pack chapstick

For about 5 minutes upon arriving in Vegas, I welcomed no humidity. And then I lamented not packing lotion and chapstick. The only time I was not thirsty was when I was drinking water, gallons at a time. Next time I head out West, I’ll be sure to have chapstick plus backups.

3. Walking Shoes are a Must

The conference center was ½ mile (I measured it) from my room, and it was on the same property. I racked up just under 50,000 steps in 3 days. Needless to say, I never wore my fancy shoes.

4. Google Maps for Casinos?

It is really easy to get lost in a casino in Vegas. I think 1,000 of those 50,000 steps was me trying to exit Ballys! Thankfully, Google Maps allows for navigating inside the casinos.

5. Can we agree on something?

I find it fascinating that 3 professional market strategists for 3 very large investment firms can have such differing opinions about the economy and the stock market. (Philip Blancato, Chief Market Strategist for Osaic Wealth; Kristina Hooper, Chief Global Market Strategist for INVESCO; and Dr. Claus te Wildt, Senior Vice President, Capital Markets for Fidelity Institutional).

Takeaways 6-8 come from their panel discussion.

6. Raise your hand if you wish you could print money

The USA has printed over $7 trillion in new money, dramatically increasing the country’s debt. If interest rates increase, so do our debt payments. Imagine if your mortgage interest rates were to increase; more of your budget would need to go towards your payments. This is the fine line the Federal Reserve Bank needs to walk. Increasing interest rates could slow inflation, but it would also mean more of the nation’s budget would be gobbled up by debt payments, leaving less money for all those other things we expect from the government. The general consensus is lower rates for longer.

7. Inflation is on the Rise

Printing new money traditionally means higher inflation. This year, we started to see the inflation number increase. High inflation can slow economic growth. Social Security even got a 5.9% COLA (Cost of living adjustment) next year to help retirees keep up with rising costs of stuff. The 3 strategists dissented a bit on whether inflation is here to stay. What do you think?

8. The shelves are Empty

As everyone has probably noticed, it’s become difficult to buy what you want when you want it! Have you tried to buy a car or even a set of Beats headphones from Best Buy (I did)? The pandemic created a supply chain disruption that shined a light on the dark side of “just in time” manufacturing. Companies no longer carry big inventories of “stuff” because, in the past, it has been easy to ship and manufacture as needed (hence the name “just in time”). Ground zero for the supply chain disruption has been semiconductors, those microchips that go into everything.

9. How to Build Wealth

Dr. Claus te Wildt from Fidelity had the best quote from the conference, “As a citizen, I am concerned about all this (the nation’s debt, interest rates, pandemic, etc.), but as an investor, I am not worried.”

I tend to agree with him. I appreciate how he does not allow his emotions about the economy to interfere with his investment decisions. Emotions should stay out of investing. Even though there is a risk involved in investing in the stock market, there is also a risk of having all your money in cash in the bank, as inflation causes your money to lose value.

Your wealth-building journey in the stock market starts by investing in a portfolio consistent with the level of risk you are willing to stomach. Hiring a financial advisor can help you determine how much risk you can take, given your age, risk tolerance, investment timeline, and purpose for the money you want to invest. You should not feel like you are”gambling” with your money when you invest in the stock market.

If you have an investment portfolio and would like me to review it, email me at erik@plan-wisely.com or schedule some time on my calendar. I’d love to talk to you.