Edit: Got to like the down voters who think individual investors should be out picking stocks. Even though experts and basic investing advice tells people they should not be picking individual stocks.
There are ETF's for everything today. If more small companies were available on public equities markets, then they would be included in a variety of different ETF's. The problem is that today you need to be an "accredited investor" to buy any of the high-growth potential private companies' equity, and even then, the best companies are usually raising capital from a small number of people and organizations.
This means the majority of the high growth in equities markets is captured by high-wealth individuals, and private organizations owned and operated by high-wealth individuals. Without strong connections, it's difficult to gain access to any solid high-growth private companies.
The days where the economy was relatively stable and large companies had wide moats against competition are largely over. The last 15 years has seen a large number of huge household names go bankrupt entirely, from Kmart to Sears to Toys'r'us to Chrysler to GM to MCI/Worldcom to Bear Stearns to Lehman Brothers to Wachovia to virtually every airline. Many more are now at risk, from Visa & Mastercard to Walmart to every hotel chain.
All of these huge returns for private tech companies are coming at the expense of their competitors, which are largely the big public companies that many people have their retirement money invested in.
That is the core problem.
10% YoY for index funds = healthy. Far lower for rigged economy reasons = a large scale societal problem.
[0]: https://en.wikipedia.org/wiki/Economy_of_the_United_States#G...
[1]: https://www.wise-owl.com/investment-education/is-there-a-cor...
What do you mean? The current market has many problems but recent returns being low is not one of them (of course returns going forward are something else entirely).
S&P 500 total returns (annualized) are:
17% over the last one and two years
13% over the last three and five years
11% over the last ten years
9% over the last eleven years (roughly corresponding to the peak of the previous bull market)
https://www.marketwatch.com/story/a-quarter-of-sp-500s-2017-...
Take them out and you're much closer to the historical 10% return, and that's in a bull market.
But if understand correctly, HashThis' claim is that the market is not even returning the historical 10% average.
Something like Wilshire Index returns 7% CAGR over the last 20 years. Interestingly, Russell and Dow are about the same 7%.
As the economy becomes ever more permanently unequal, the concept of one number representing inflation becomes less meaningful because there is no longer one standard of living or one cultural expectation. Something like M2 is 14000 now and 4000 in 98 so thats 6.4% annually. After tax the Wilshire would only return maybe 3% or so, minus 6.4% inflation, whoops... Or you could use the famous Big Mac price index which is about 2.8% over the same time period, leading to a very slight profit of a fraction of a percent. Are you part of the separate subset of society that lives off M2 or off big macs or ...?
So investing in "the market" depending on hand waving provides a modest negative to approximately zero return. If you can pick the subset of winners in advance, the SP500 is quite profitable, although if you can pick winners in advance there's probably more profitable things to predict.
Also remember the market can remain irrational longer than you can remain solvent over all values of "irrational" or "solvent" or "longer". I have a medical insurance bill to pay next month, not over ten twenty or hundred year average. Pulling out a constant sales price from the market to live draws down a balance faster than pulling out a constant small percentage of total value over a long time period.
Then of course there's long term demographic issues. The USA is supposed to be richer in the future because... why exactly? You might get a bigger slice of the pie, but theres no particular reason to expect the pie overall to expand.
Another thing you may find surprising: the long-term historical average return for small cap indices is higher than for large cap indices.
When you invest in the SP500 and companies drop out of it, your investment in those companies ALSO drops out.
And the publicly stated "return" of the SP500 takes this into account.
Even more simply, just imagine how the market might look different if you could invest in a VC. You don't pick startups, you pick a VC- kind of like picking a fund today.
[1]: https://www.thebalance.com/index-funds-vs-actively-managed-f...