Why choose to invest in stocks? Is everyone's memory so short that they can't remember what happened in 1929? Do these naive people want to get ripped off by playing a game that only experts can win?
No. Here, things have changed, and word is getting out. Millions of people put their money into war bonds for the first time and liked it. The bonds were given out in amounts that were easy for people to handle. Their price didn't change, so you could put them away and forget about them. They steadily went up in value and could be cashed without any hassle. If these things could happen on the stock market, it might make a lot of sense to invest.
Prices were always going to go up and down on the market. Common stock could never be as stable as an E-bond, which is a debt to the government. Still, it had turned into a very respectable item. The workers found out that their union pension funds had a lot of good common stocks in them. And the companies they worked for often gave them the chance to buy stock in the company through some sort of monthly plan. After a fresh look, different state commissions decided that common stocks were safe enough to be included in widows' and orphans' trust funds, which are usually the safest type of portfolio.
On top of that, common stocks in the rising market after the war were doing well. The most that could be earned on savings accounts was between 3% and 1%. Stocks were paying at least 4, and usually 5 or 6, and sometimes 6 or 7. When they paid less than that, it was usually because their price went up, which made the yield go down but the value go up, which was a good thing. There's also nothing wrong with that. There were also things like splits, stock dividends, and extra cash returns in the cake.
Also, the market was becoming more accessible to people with less money. By putting money into a mutual fund every month, you could get a proportional share of a huge stock portfolio whose pieces would have been too expensive to buy separately. And in 1954, the New York Stock Exchange came up with the revolutionary Monthly Investment Plan (See Chapter 11), which lets people buy fractions of shares of stock at any price on a regular, accumulative basis. Brokers realised that there was a huge pool of untapped investors, smiled at the small accounts, and
spent tens of thousands of hours teaching anyone who would listen about how to invest in common stocks.
But none of this would have mattered if people hadn't started to believe in the market. It took a long time for this trust to happen. Since the crash of 1929, the exchanges had been working hard to get their houses in order and convince people that they were honest and responsible.
But most people didn't listen, except for professionals, smart traders, and big buyers who didn't need to be told. Still, the work kept going on. Federal and state rules were put in place, and the exchanges themselves tightened the rules on the floor to make it illegal for insiders to manipulate and cheat. When everyone came back after the war, the market had been cleaned up and was ready to do business.
People had money. The goods were nice-looking. And the market was open, above ground, and full of light from the sun. From this list, it looks like about 12.5 million Americans have become investors.
This could be like Forex, where you can get free software that can accurately predict how prices will move in the future, making it safer for all investors.
