OK, snowflake. Here’s how to retire rich — even if you just got wiped out.

The Wall Street Journal published an article over the weekend about all the millennials and Generation Z “zoomers” who have fled the markets after getting crushed in the 2022 rout.

One was 25-year-old Omar Ghias, who apparently made $1.5 million speculating during the 2020-2021 bubble and then lost it all.

Another was 28-year-old Jonathan Javier, who shared this amazing insight: “Now I know the key to making a profit is buying when the stock is at a low price point instead of just buying and ‘hoping’ that I will make a gain from it.”

The headline: “The Retreat of the Amateur Traders.”

Read: How safe is the stock market? It’s more dangerous to avoid the stock market.

These guys are not alone. A generation of young would-be investors just got very badly burned by the 2022 wipeout, which crushed all the speculative gambles they were playing during the 2020-2021 megabubble spurred by COVID lockdowns and the federal government’s free-money bonanza.

Cryptocurrencies, nonfungible tokens, high-flying tech stocks, bankrupt meme stocks: No idea was too stupid to go up in the bubble. And now those things have come crashing back down. Red ink and misery all around. Ghias has $51,000 in debt and $6.99 left in his checking account. He is working at a deli in Las Vegas.

If this sounds like you, here’s some good news.

You can view your losses simply as losses.

Or you can view them as, well, tuition.

A top Ivy League M.B.A. program will cost you $200,000 and change.

You went to Wall Street. You paid the bill. And now you’ve graduated with an education.

You can look at that tuition money as wasted — or you can put your new knowledge to good use.

I’ve been through this many times before and I’ve seen the sad examples of people who’ve thrown away all the tuition they paid to Wall Street. They got wiped out in the dotcom crash of 2000-2003, or the financial crisis of 2007-2009, or some other speculative bust. They lost a ton of money. And then they swore off markets and investing forever. 

“I’ll never touch the stock market again,” they tell me. Instead, they keep their money in bank accounts, where it is “safe.”

And I’ve realized very quickly that trying to change their minds would be a total waste of my time. Once bitten, forever shy.

It’s a tragedy, because they end up losing twice. They lost the money they lost. Then they lost all the money they could have made simply by applying the lessons they’d learned.

Like: Speculating isn’t investing.

Like: The stock market can plunge in any given year, or even for two years, or three. But over time it goes up, and up, and up.

Like: Pretty much everyone who has diversified their investing, across lots of different stocks and over time, has won. Big time.

Don’t believe me? Imagine two people who started saving 40 years ago in their mid-20s and who are just getting ready to retire in their mid-60s.

Imagine they’ve earned exactly the same amount of money each year: Let’s say they’ve both earned the median U.S. household income. And imagine they’ve saved exactly the same amount each year: Let’s say they’ve saved 5% of their gross income.

One of them kept all their money in Treasury bills or the bank, earning steady and reliable and safe interest. And the other kept their money in the stock market, in a boring S&P 500


Where are they today?

The person who kept their money “safe” in bills or the bank now has $125,000. That’s based on actual historic returns from the mid-1980s to the present.

And they’re probably feeling pretty smug after dodging last year’s stock market slump. They also felt pretty smug in 2008 and 2009, and in the early 2000s, and during the spectacular crash of 1987.

The person who kept their money in the stock market instead? Today they’re retiring with $710,000. No, really. Nearly six times as much.

Will this sort of performance be repeated? Nobody knows for sure. You can argue, for example, that the past 40 years have mostly been pretty good for the U.S. stock market. Despite the crashes and slumps, we’ve had booms in the 1980s, the 1990s and the 2010s.

But I’ve looked at the data going back to before the Great Depression. And when you compare the rates of return on stocks and short-term savings (using the interest rates on Treasury bills), the last 40 years have been pretty typical.

Over the average 40-year period since the 1920s, someone who invested regularly in the stock market ended up with more than 5 times as much money in retirement as someone who invested that money in bills.

Even if you saved your money in 10-year Treasury notes, which offer way better returns than you will get in savings accounts, you didn’t do that much better over the long term. The person who kept their money in the stock market ended up with more than 4 times as much as you.

Bottom line? If you lost a ton of money last year, you can make things way worse by learning the wrong lessons, throwing away your Wall Street diploma and sitting out the stock market for the next 40 years. Or you can put your painful, costly experience to productive use.

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