Why 99 Million Americans Have the Same Wallet as the Vice Presidential Candidate

Like it or not, American politicians are free to trade stocks like any other citizen, even if they sometimes have greater access to nonpublic information and the ability to influence laws that have a real impact on private sector companies.

For example, among the factors that have put downward pressure on Chinese stocks in recent months are U.S. restrictions on exports of high-powered chips and the technology used to make them. Similarly, helpful legislation also has the potential to support stocks: consider the CHIPS Act of 2022, which allocates tens of billions of federal dollars to companies like Intel to help them build new chip manufacturing plants in the United States

In this context, it may seem refreshing, or at least unusual, that Democratic vice presidential candidate Tim Walz does not own a single stock. Moreover, Walz owns no bonds or real estate, having lived in the Minnesota governor’s mansion for the past six years. Walz does not own any major financial assets directly, although he does have pensions from his years as a teacher and his time as a congressman.

This lack of financial means makes him something of an exception in Washington, but among ordinary Americans his position is far from unusual.

According to a study by The motley madman62% of Americans own stocks. That’s 162 million American adults, but there’s still a significant percentage of people who don’t own stocks. There are 99 million of them.

It’s not clear why Walz didn’t invest in stocks. Perhaps he decided to rely on his retirement income. Other Americans may have different reasons for not investing in the wealth-creating engine that is the stock market. Three reasons seem particularly common. If you’re one of those people who let any of these reasons keep you away from stocks, you might want to reconsider.

1. Fear of losing money

The percentage of Americans owning stocks has increased dramatically since the financial crisis, when it fell to a low of 52% in 2013.

The best explanation for this trend is that stock market crashes scare retail investors. They naturally come to believe that the risk of losing half or more of their investments is too great, even though the potential returns from the investment may be substantial.

However, major stock market crashes are relatively rare. S&P 500 has historically fallen 30% or more about once a decade. But more importantly, the broader market index has always rebounded after these bear markets The S&P 500 has managed to rally and reach new highs. It even hit a new all-time high just a few weeks ago. The strength of the U.S. economy has made the stock market a reliable long-term growth vehicle for investors. Over its history, the S&P 500 has delivered a compound annual return of about 9%, dividends reinvested. That’s a tough standard to beat over the long term, no matter the asset class.

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2. They can’t afford it

Many Americans believe…