Gambling and Investing

Bill Parrott |

Will Rogers said, “Don’t gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.” Sound advice.

Over the past decade, the Nasdaq composite index has risen 347%, averaging 16.15% per year. A $100,000 investment is now worth $446,900. The Nasdaq returns have been phenomenal and well above the long-term trend of 10%.

However, the returns have not been without pain. This year the Nasdaq was down 22% before rebounding, and now it’s only down 16.8% from its high. The index fell 30% in 2020, dropped 24% in 2018, and had a few 15% corrections and several pullbacks of at least 10%. The average decline has been 3.5%.

The average annual return for a 3-month US T-Bill has been 0.59% over the same time frame. A $1.00 investment is now worth $1.06. If you don’t want to lose money, invest in T-Bills.

Risk and reward are related. If you can’t withstand the downturns, you’ll never enjoy the up days. To create generational wealth, you need to own stocks.

Happy investing and buy the dip!

April 17, 2022

Note: Past performance is no guarantee of future performance.