As we are all in a world of crap because of the financial meltdown, I thought it would be relevant to discuss where wealth actually comes from. Over the past decade and a half, it seems that people believed that wealth was created by speculating (they called it investing) in the stock market. In 1997, had you invested $1,000 in a basket of DOW Industrial stocks, you would have lost about 30% after adjusting for inflation.
Where is the wealth? It is gone, but it never really existed in the first place.
Real wealth comes from real profits which are created by real value for a consumer. Buying stocks is not investing except in the rare instance where the company is on the other end of the transaction (IPO and stock offerings). So unless the company is getting the money you are paying for their stock, you are not investing.
What you are doing is buying something that someone else thinks is going to go down in value. Otherwise, why would they sell it?
You aren't investing. Instead, all that has occurred is that the owner has changed.