How is it possible that two-thirds of Americans don't feel the benefits of this magical stock run and 61% of our population say that stock movements have little or no effect on their well being?
Is it really possible that only 14% of families own stocks outright?
Yep, according to a dispiriting Financial Times-Peter G. Peterson Foundation poll, all of this great wealth creation is the creation for the few, not the many. About 40% of the people don't even know it is happening.
How the heck can this be happening, even as the president champions the stock market, or at least his impact on the stock market when it makes regular new highs? His 67 million Twitter followers have to have some sort of clue about the market, no? Don't some of them realize that the S&P 500 is up 24.2% since the start of the year, the best in six years?
Why do people dislike the stock market so much and remain ignorant to its successes? I think I know the reasons and I am going to go over them and tell you how wrong these side-line sitters are and will continue to be.
The first reason? The disastrous Nasdaq bear market at the turn of the century left a generation of people impoverished -- many because they were simply buying the hottest stocks imaginable and chasing performance. When it happened, when the dotcom explosion and the telco collapse occurred, it spelled the end to what we used to call the greatest story ever told, the public's love affair with stocks. I know, I was a part of it, starting TheStreet.com in 1995 and immediately finding hundreds of thousands of people with a thirst for stock knowledge.
At the top, we had valuations that were through the roof and unsustainable and fraudulent, worthless companies being pumped out by the hundreds. It was a travesty. No one protected the public and many individuals swore they had lost so much money that they would never come back.
In a half dozen years' time, investors once again started to wade back in. But then we got the Great Recession and gigantic sums were wiped out by the collapse of huge institutions with gigantic market caps.
I think the one-two punch was enough to alienate millions of people thinking about buying stocks.
Those two declines, plus the flash crashes -- of 2010 and 2015 when hundreds of billions of dollars were lost in minutes, because the systems that control stocks went down -- gave even the hardiest of investors the willies.
So in that sense, shame on the asset class and the financial firms for not taking enough action to stop the recklessness and greed and not championing legislation that would bring about a level playing field between the fast-trading hedge funds and the regular people left, because it seemed -- and often seemed -- rigged against them.
Next indignity? The stock market lost any champion of any kind either in the financial world or in the political world and nobody did anything about the miscreants who almost brought the nation down with their malfeasance during the Great Recession.
It wasn't always like that. Twenty years ago I used to tag-team with Dick Grasso, the former CEO of the New York Stock Exchange, and we would speak to throngs about the greatness of owning a piece of a company. Throughout his long tenure at the exchange, he was a tireless promoter of owning shares in great American companies, staying on top of them and going along for the ride in thick and thin.
His main goal? To get individuals to try to make money over the long term owning the stocks of companies they like. We used to call it owning a piece of America and we loved it. Dick would talk about how to take advantage of the progress this tremendous nation generated and the ingenuity and resourcefulness of our best CEOs and the people who worked with them, We didn't have a lot of stories about how CEOs made billions and the rank and file made tiny fractions of that because the pay differentials hadn't yet gotten out of control as they are now.
Dick and I would talk about the power of compounding dividends, the need to reinvest them and to constantly search for dividend aristocrats with good balance sheets, companies that could seemingly forever raise those dividends and their stocks would advance and the yield would go down because the denominator went higher.
Dick subsequently retired after some difficulties over his pay package and the next thing you know a good man, a true champion of the little guy, departed from the scene. No one who replaced him ever embraced that role. Maybe it was a business decision not link the institution with the weakened asset class. Maybe it was the headlong rush into index funds that made it so owning a piece of America became a relic, a thing of the past. The lack of a leader anywhere in any part of the firmament -- a leader who champions owning individual stocks -- is so palpable to me that I find it sisyphean sometimes to even talk about them.
Plus there have been enough scandals, enough chicanery, and a lack of punishment for those CEOs who committed them, that the individual stock bashers, the ones who sound the warning about single stock risk, have grabbed the microphone.
They are the only ones, Michael Cembalest, chairman of "Market and Investment Strategy," has been doing some remarkable work of late about how Armageddonists have had such a powerful voice and they do an amazing job frightening people out of stocks and into bonds at what, empirically is the worst possible time to do so. They give no credit to the CEOs who build and manage amazing companies like the Apples (AAPL) , the Microsofts (MSFT) and the Amazons (AMZN) . It's all doom and gloom.
The media's not much better. Michael's latest piece has a remarkable bar graph entitled "the Medium is the Message: relative reporting of positive economic news on select cable programs," and there is almost no reporting whatsoever about positive economic news. My jaw dropped when I saw that it was last on the list of stories that these cable networks covered.
Don't I know it. I am usually summoned these days by national networks who want to know how bad things are and whether people should panic. It's painful and it's wrong. I should go on when we have really good days, too, perhaps even just as a way of saying, don't be too greedy. Not just damage control.
So, I guess I can't blame people for being ignorant of how much money is being made owning stocks, especially winning individual stocks.
But that's why I felt last night's interview on "Mad Money" with the two gents who run Robinhood was one fantastic breath of fresh air. They are at the vanguard of a rekindled interest in individual stocks. They are playing field levelers and their democratization message to own pieces of individual stocks is resonating. They wouldn't be able to have 10 million accounts, up from one million just a few years ago, if they aren't succeeding, especially with millennials.
I love this trend. I know that big money can be made owning stocks. I see it and hear about it every day. These new investors are doing so well. And they believe in buying what they know and putting the stocks away. They own index funds but they know that individual stocks can co-exist with an indexed portfolio. They will do well owning a piece of progress a piece of America.
You know what's best? In an era when capitalism is under attack at unprecedented levels, these 10 million strong investors are willing to overlook the short-term news of the day and do some buying and yes some trading, but most of all, doing some investing in shares that can appreciate and do so at a young age where they can make the money back if they lose some. By not letting the armageddonists and the negativists and the fraudsters, and the hucksters get to them, they are going to make billions of dollars that others don't even know are there to be had. They are the real winners. And I salute them.