By Charles Payne
Founder & CEO
Wall Street Strategies
Host: Making Money w Charles Payne
Americans have largely written off the stock market after enduring two devastating market crashes in less than a decade. The result is since the Great Recession fewer and fewer households have money invested in an individual stock, mutual funds of retirement accounts like 401K or IRA.
Even after the carnage of 2000 household investment in the stock market hovered around 61%- it came into 2013 at just 52%.
Now, cynics and skeptics, many would-be investors vowed never to return.
This is a natural reaction in the aftermath of stock market crashes exacerbated this time by a never-ending multitude of noise from market bears, book-sellers and curmudgeons whose investment decisions are based on personal feelings about people in power or entities.
While there’s no doubt the recovery has been hampered by poor fiscal policy and at some point there will be a day of recognizing from monetary policy the true nature of investing is to focus on owning great companies with values unrecognized by the market. In fact I spend much of my days explaining that Wall Street the physical place where those hedge fund masters of the universe count their cash shouldn’t be confused with owning shares in great companies.
Expensive Train to Miss
As a percentage of total financial assets this is the second highest level ever for stocks. Most of that has to do with the rally if people simply kept some exposure to the market it would be a big chunk of their net worth. And some has to do with the value of other assets like housing and gold taking big hits. But, for those that held on through the down drafts it’s been a worthwhile ride.
Even armed with all of these facts fence-sitters continue to reject the notion of investing. So, let me take a different approach because there are a few things most people acknowledge as facts and share as fears.
You probably aren’t going to earn enough money during your working years to live the life desired in the golden years. The solution is your money must work for you and in order for that to occur, you must own something. It can be a business, it could be a stamp collection but something needs to generate profits or have value that outruns inflation.
The other thing we mostly agree on is that heart and soul of America’s capitalistic system is the small business owner.
Headlines tout the recovery that’s gaining steam and there’s no doubt things are better but what regular folks understand is this isn’t a recovery that has coattails. One of the reasons is the attention and taxpayer money coupled with phantom fiat money given to big banks and businesses to make it through the difficult times. I’m no fan of the Federal Reserve but think the focus on its impact on the stock market misses bigger issues.
- Enabling Big Government borrowing and spending that crowds out private sector
- Promoting behavior at banks that continue to put entire nation at risk
So, against all odds including the reluctance of banks to provide working capital, small businesses have carried the day. The giant check processing company ADP issues a job report each month dividing business by large, medium and small. By far the small category generates more jobs than the others and in November 2014 created 49% of all net jobs.
Combing through the data further it’s the very small businesses that often pump out the most jobs.
Eventually a lot of these small companies become larger companies and their shares are offered to the general public. The companies that are hot out of the gate, however, are detoured into a path that sees a lot of upside value sucked out of them before the general public gets a chance at ownership. In fact 2015 will see a lot of hot initial public offerings of companies that are already household names or well-known in the tech world instantly making insiders millionaires and billionaires.
At the top of the list is Uber the ride-share company that’s as famous for its businesses as it is for running afoul of the law. By the time this company becomes publicly traded everyone will know what it is (my son told me about the company two years ago when he was 16 years old) and think of it as a hot company and probably a hot stock worth owning at any price.
Take a look at the levels of funding for Uber.
I’m not picking on Uber or hating on billionaires making easy money but making the point that getting in early and at the bottom can be very lucrative although not necessarily as quickly as the hot Silicon Valley deals.
At the end of the day everyone must have some exposure to the stock market with a portfolio mixed of old blue chip names and a few small names that could become future blue chips. Any excuse not to be an investor falls on deaf ears and results in empty wallets.
Happy New Year!
Wall Street Strategies, Inc.
CEO and Principal Analyst
Charles V. Payne is the Chief Executive Officer and Principal Analyst of Wall Street Strategies, Inc. (WSSI), which he founded in 1991. With less than $10,000.00 in start up capital and working from his apartment, he launched WSSI to provide a unique brand of stock market advice. Through this service, subscribers (money managers and individual investors) began to reap sizeable profits and the firm developed a national reputation as provider of timely and effective equity analysis. Today, WSSI provides information to over 120,000 registered subscribers, in more than 60 countries as well as several of the largest bank/brokerage firms. Charles oversees a team of stock analysts that cover specific industry groups, in addition to monitoring the entire market and individual sectors on his own.
Charles' passion for the stock market began when he was 14 years old. He told his mother then that one day, he would work on Wall Street.
Charles got his start in the industry in research at EF Hutton in 1985. After two years, he switched gears and accepted a position with boutique brokerage firm, Greentree Securities. It was there that he first saw a niche for independent and timely equity advice, which led to the creation of Wall Street Strategies. Due to the success of his guidance and stock selections, Charles has become well sought after by many highly respected finance-oriented radio, web and television programs. He is widely recognized in the media as a leader among the analyst community, and is routinely contacted for his market opinions by several prestigious news organizations.
On June 2, 2014, Fox Business Network launched Charles’ new show “Making Money with Charles Payne” which is featured daily at 6pm EST. He is a member and occasional host of “Varney & Co” and in addition, he is a guest-host on several shows including “Cavuto on Business” and “Your World”.
Over the years, opinions and articles on Charles Payne have been featured in prestigious news organizations such as Reuters, the Wall Street Journal, and the New York Times. He has been the keynote speaker at numerous investment conferences, grass roots events and educational gatherings worldwide.
Charles is author of “Act Fast, Be Smart and Get Rich” debuted in April 2007.
Charles was awarded the Congress of Racial Equality (CORE) Man of the Year Award in 2009.
Charles attended Minot State College and Central Texas College during his time in the Air Force and Majored in Criminal Justice.
Hobbies include drawing and painting along with reading non-fiction books.
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