BMT, I have two points to make regarding your comment:

First is that you seem to think that the only investment choices available are stocks, real estate, and savings accounts. If you look outside of “traditional investment vehicles” as you put it, you’ll find a wealth of Exchange Traded Funds (ETFs) available to the average investor that allow people like you and me to take advantage of both the long and short side of a range of investments simply by buying shares of the ETF through a brokerage account. For example, you could invest in commodities such as gold and oil by purchasing shares of GLD and USO, respectively. If you think that the long term treasury bond market bubble is about to burst, you could buy shares of TBT, whose price is meant to track “twice the inverse of the … U.S. Treasury index” which means that it goes up when bond prices go down. (Full disclosure: while I am not a broker or investment advisor, I do own shares in the above mentioned ETFs).

The second point relates to the bigger picture of “the thing I can not get over is that if you eliminate stock market climbing as wealth building, there is not much left to build wealth on.” This takes me back to my original point about waiting for the market to come back: you and I are not going to get rich off of our investments. It became the American dream in the late 1990s to be able to live off your investments, and I don’t doubt that some people are fortunate enough to do so, but it just isn’t realistic for the vast majority of us. Your statement of “what’s left is lottery or plain hard work in a small business” is correct. There is no get rich quick investment out there.

My investment focus has shifted from “wealth building” to wealth preservation. I see wealth building through investing as no longer being realistic and am more concerned with simply preserving what I currently have. While it may seem easy to preserve wealth simply by putting your money in a savings account, I don’t see it as being that easy. The U.S. dollar is NOT a store of value, as its value is continually being eroded by central bank quantitative easing and spiraling national debt. Which is why the purpose of investing your money in assets (whether they be stocks, real estate, or gold) is simply to preserve wealth rather than to build wealth.

I’ve come to realize that what we saw from 1997 through 2000 will never happen again in our lifetime. Look at Japan: the Nikkei finished 1989 around 37,000. It’s below 10,000 now. That’s almost 20 years later and it’s down 72%. OK, so you and I don’t invest in Japanese stocks, but how about tech stocks? The Nasdaq topped 5,000 in the beginning of 2000. It’s below 1,900 right now. That’s down 62% in nine and a half years. I’m tired of hearing that stocks are a long term investment. How long does long term have to be? I citied two examples of broad indexes with terrible returns over the past 9 and 20 years. People have been waiting for those markets to “come back” for years and years.

I’m now convinced that the only way these markets will return to their previous lofty values is not through the appreciation of the aggregate growth and value of the companies that make up the market, but rather through a depreciation of the currencies that we measure the worth of these companies. Think about it this way: if there are currently 10 trillion dollars in existence and Microsoft sells for $22 a share, what would a share of Microsoft stock sell for if the money supply doubled to 20 trillion dollars? If all other factors were equal, Microsoft would sell for $44 a share. Has Microsoft captured more market share or been more productive or efficient? In my example, they have not but yet the price of the stock would still go up.

The above scenario is exactly what the powers that be in the government and the federal reserve hope will happen, that simply through money supply growth we will all perceive that we will be richer through higher asset prices (such as stocks and housing prices) when in fact they are just creating inflation which is paid by all of us in the form of a hidden tax.