Investing in the stock market makes sense, part 4
Posted by Jason Apollo Voss on Aug 8, 2009 in Best of the Blog, Blog | 5 commentsThis is the final edition of why investing in the stock market makes sense.
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Liquidity
Another advantage of investing in the stock market vs. other types of investments is liquidity. Even for thinly traded shares of stock, it usually only takes a day or two to sell your interest in a publicly traded firm. Compare this to trying to sell a house, office building, baseball cards, art, gold jewelry, bonds and preferred stock.
Liquidity doesn’t just mean you can sell something quickly, it also means that you typically get a good price. Liquid markets have lots of buyers and sellers and that means that your price likely represents an intelligent evaluation of a business and fair market value.
Axiom 4: Stock markets are liquid.
Information
Because of the popularity of stock markets, most publicly traded businesses have a wealth of information available about them. Compare this to that house you almost bought until the inspector discovered water in a corner of the basement. More information means that you switch from speculation to investment as you are able to engage, not just your intuition, but your intelligence, too.
Axiom 5: Publicly traded firms have a wealth of published information available for evaluation.
Regulation
Our last reason for why investing in the stock market makes sense is the presence of a solid regulatory structure. I know many people would disagree with me, but good regulation ensures that fairness prevails in most stock market transactions. This strongly favors the little gal and guy. As I have said so many times, football without rules would eventually become a gladiatorial sport. The UFC without rules would quickly become a gladiatorial sport. Regulation makes sure that there is a more level playing field.
Axiom 6: Regulation ensures a more fair investment environment.
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In conclusion, I am and will continue to be an investor in the stock market. Its advantages are myriad and prudent investment in specific businesses has a high chance of returns that outpace the growth in GDP and of most other asset classes.
Jason
Nice little plug for your hopefully forthcoming book, about mixing intuition and intellect. Any new progress on that front?
Thanks for asking. The book has been re-edited and is ready to be re-submitted to my agent. We will decide the course from there. Most likely I will initially publish with Morgan James. If it does well with that House then I will see if it can do well at a larger publisher.
It has been interesting seeing "how the sausage is made" at the large publishing houses. They really don't do much for authors any longer and most authors actually lose money in having a book published. And investors don't like that outcome very much.
I will keep everyone posted.
Thanks Nate.
I am always happy to find articulate well written blogs, even if I don’t agree with what they are saying. Keep up the good work.
Thanks for sharing the site. I didn’t think abort it ever before.
Oh these are some rare points. I will have to shall have to must have to contact you off ofthis blog.