Making sense of the markets this week: June 11, 2023

Is investing a gamble?

If you’re going to bet on something, bet on Ben Carlson for a good perspective. He wrote an excellent oped titled, “The Stock Market is Not a Casino.”

There are Canadians, who don’t really understand the stock market and like to compare it to gambling. True, some investors treat short-term speculation like a blackjack bet. But actual long-term stock-market investing consists of purchasing pieces of companies and holding, so they can then watch those companies conduct their businesses and earn profits. That’s not like any card game we’ve played. 

This simple reality is true whether you live in the intensely capitalist wealth-creator that is the U.S.A., or in the rest of the world, including Canada.

We found it very interesting that international stocks were actually up at a higher percentage than that of U.S. stocks, over five- and 10-year periods. Of course, the U.S. market’s highs generally are better than those of other countries—but still, a win for diversifying!

Furthermore, as Carlson points out in his post, the house doesn’t always win. “The house,” in this case, are the big investment companies. Their ability to soak up profits from investor activity has gone way down over the last decade due to the break-out of discount brokerages.

Historically, investing in a broad diversified mix of profitable companies from around the world has been the way to grow money, and our “bet” is that it could continue that way for a long time to come.

Worries set in about lack of panic?

Given all the headlines about debt ceilings, war, climate change, food shortages and inflation, Canadians might reasonably have expected the 2023 stock market to look, so far, pretty volatile.

The reality is: Despite the many negative factors, large companies have continued to make a lot of money, and the S&P 500 index has been remarkably calm.