Stock Market for the Win Research Paper Example | Topics and Well Written Essays - 1500 words

Stock Market for the Win - Research Paper Example It is time for the investment world to reap the benefits that we have seen transform and improve the rest of our world. (Kimmel and Hirsch, 2009, p. xiv). The time has come for those individuals who have yet to plunge into the welcoming waters of the stock market to do so. This paper will outline four principle benefits: financial return, the security of diversification, and the sense of control over one's financial future. The principal reason for investing in stocks flows from the likelihood of financial returns that are higher than one might earn through some other investment strategy. Investing in the stock market offers one the opportunity to take the money that they've earned and allow that money to work for them beyond the point of its acquisition. The stock market constitutes the most enduring system for assessing and contributing to the larger financial system, and provides one of the principle ways for informed consumers to earn a higher rate of return than would be possibl e through other investment or savings strategies. With an average return on one's investment of over 9% over 25 years (Observations 2009), the stock market makes even high fund money market accounts seem the choice of cowards or simpletons. Consider this particular case. A decade ago, a struggling computer manufacturer stood on the brink of bankruptcy, its stock price falling to historical lows. So real was the chance that the company would fold that its arch rival injected capital to keep them afloat, so worried was this rival about suits alleging monopoly control of the industry. The rescued company's stock price hit bottom at under fifteen dollars (Yahoo Finance 2001). Investors fled, but not all of them. Some committed themselves. Some bought in. These investors thought different. Today, that company, Apple, Inc., boasts a stock price of 570 dollars (Wall Street Journal 2012), the largest market capitalization of any company in history, and the more capital reserves than the U.S . federal government. For the investors that stuck with Apple, or who recognized opportunity in the collapse of their stock price and purchased new stock, the rewards have been substantial. Of course, one could lose money instead of making it. As with any investment, the possibility exists that the return will be negative and that the best laid investment plans will be more those of mice than of men, and that one's money will vanish on the next margin call. It would be a disservice to pretend as if this chance did not exist, precisely because it is the chance of failure that makes the reward for success so substantial. Indeed, some might describe the stock market as a â€Å"gamble† with your money, a sort of DOW and NASDAQ checkered roulette wheel. Dismissing stocks as a gamble would also be a disservice, for it misconstrues the structure of the stock market in order to stretch a metaphor to uncomfortable lengths. In a casino, for example, one gambles on games of chance, stru ctured such that the house always wins. But here the house, if one is to follow the dictates of the metaphor, are the composite of the companies themselves, and if investment dollars flow in, then the eventual likelihood of dividends flowing out increases in the aggregate. In addition, unlike games of chance, with stocks one can make an informed and researched opinion. The odds are not in the house's favor,