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For more infomation >> (December 1, 2017) A wedding is put on hold until one of the betrothed can prove she's ready.... - Duration: 40:21. 
Stop the presses!
People the market is growing slower than ever before!
It's almost not even worth putting your money in stocks, any gains that you get will be
wiped out by inflation!
And then what if the market goes down?
What if it goes down?!
Somebody hit the panic button!
Hey guys Daniel here from Next Level life and today we're going to be covering a question
that I'm sure you have seen at some point in well a lot of the financial articles over
the last few years and that is whether or not the market is actually growing at a slower
Pace than it was in the past.
I've heard a lot of people say that the last fifteen have been the worst in the stock market's
history.
But is that really true?
Is the market really growing slower than ever before?
And if it is true then is it still worth it to invest?
Well the answer is a little bit tricky, because as is the case with a lot of financial questions
the answer is it depends.
And it depends on a few factors, the first is what time frame are you using to make the
claim?
For example if you look from September of 2000 to september of 2017 when this audio
is being recorded, then there's no question that the Market's been growing slower than
usual.
Like I've said in previous videos the S&P 500 has grown at a rate of about 8.6 percent
per year from September of 1978 to September of 2017.
Which is way more than the 2.5 percent per year rate from September 2000 to September
2017.
However that's basically starting from the absolute peak of the market before the crash
and only looking at a short time period to gather your results.
It usually takes a few years for the market to rebound.
You could also say that the market is growing faster than ever before if you were to look
at September of 2009 until September 2017.
During that time period the market is growing at about 13% per year on average.
But of course that has the same problem in reverse you're starting from basically the
bottom of the market and examining only a short window of time to back up your claim.
And what's more is you're not taking into account all the factors.
In essence you're almost asking the wrong question.
Because whether the market is or is not actually growing at a slower rate than before isn't
the most important thing to know.
The most important thing to know is what's happening to our individual buying power.
Because money is only as good as what it can buy.
One of my finance professors back in college always used to talk about how you could fall
asleep for a hundred years with a couple thousand dollars invested in the stock market and when
you wake up you realize that you all of a sudden had $1,000,000 invested in the market
and you'd be thrilled.
You'd call all your buddies and tell them that you're taking them out for dinner,
and it's on you.
Then you go to the local McDonald's and realize that one Big Mac is going to run you 2 Grand.
Suddenly you don't feel as Rich anymore.
So again money is only as good as what it can buy.
And also I like how the character in this example realizes that he's a millionaire
and the first place he thinks to take his friends is still McDonald's (chuckle)...
I'm sure there's a lesson about the power of habit in there somewhere.
Or maybe this particular character was just cartoonishly frugal-
Anyway getting back on topic.
In order to figure out what it can buy you also have to look at the CPI or Consumer Price
Index which is basically a way to get an idea of inflation during a certain time period.
The CPI basically measures a weighted average of prices of a basket of consumer goods and
services including food, beverages, housing, apparel Transportation, medical care, Recreation,
education and some other goods and services and sees how quickly the prices for them change
over time..
And sometimes, though not always, you'll see that when the CPI is increasing very quickly
so is the market.
A great example of this would be between the years 1979 and 1983 during that time the market
was growing at an average of about 12 and a half percent per year however inflation
was just about keeping Pace with that.
We saw an 11% increase in the CPI in 1979 a 13% jump in 1980, a 10% boost in 1981, and
a 6% and 3% increase in '82 and '83 respectively.
That averages out to an inflation rate of almost 9% per year during that time.
Meaning that you're effective increase in buying power only increased by an average
of about three and a half percent per year from 1979 to 1983.
So when you look at it from a buying power perspective has the market really been doing
that bad these last 15 years?
As it turns out not really.
If you look at the market as a whole for the 40-year period from 1978 to 2017, you see
that it is grown at an average of 8.6 percent per year.
During that time the average inflation has been about 3.7% per year.
Meaning your increase in effective buying power during that time is about 4.9 percent
per year.
But in the last 15 years, so from 2003 through 2017 the market has grown at an average of
7.2 percent per year.
Which on the surface is lower, but the average inflation rate during that time has been 2.1
percent per year.
Meaning your average increase in effective buying power has been about 5.1 percent per
year.
So there you have it my friends technically if you look at it just from a market appreciation
standpoint the market is growing slower than before, but if you take into account what
you can actually do with the money that's appreciating it doesn't really look all that
bad.
But that'll about do it for me I hope you enjoyed the video and if you did or if you
learned something be sure to like And subscribe I've got a lot more of these Finance coming
out in the near future as well as some more book summaries and other fun stuff.
But with that being said, thanks for watching and have a great day.
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