Presidents are usually not very good at predicting market trends, but back in the dark days of the global financial crisis, as we watched out retirement accounts diminish by 40% or more, President Obama made a an extraordinary statement:
Some investors may remember Obama’s previous equity valuation comment from March 3, 2009 when the S&P 500 traded at 696: ”On the other hand, what you're now seeing is profit and earnings ratios are starting to get to the point where buying stocks is a potentially good deal if you've got a long-term perspective on it.
This was just two months of taking office as former Bush economic advisors were warning that
"Obama's radicalism is killing the Dow."
Yesterday the S&P 500 closed the year at 2,059, a 11.4% gain for 2014, and a solid 200% gain in under 6 years. About half of all Americans own some stock, either directly or through their employer-sponsored retirement plans.
If you are one of the 47% who own stock, pat yourself on the back. If not, consider putting some money in a stock index fund through a discount brokerage ( I happen to like Vanguard, since it is owned by us, the investors, and has the lowest expenses in the industry. But Fidelity, Charles Schwab, and others also offer many good index fund options.) For most people, investing in an index fund is better than trying to pick individual stocks. (An index fund mirrors the performance of market indices such as the S&P 500 and is therefore less risky than buying individual stocks).
Will the stock market continue its extraordinary performance in 2015? The outlook is reasonably positive with low inflation, low interest rates, strong company profits and the windfall from falling energy prices. There are always risks and unknown factors that could spook the market. Still, studies have shown over that, the long term, investing in stocks is a good way to build wealth for yourself and your family.