May Newsletter

“The stock market is a device for transferring money from the impatient to the patient.”
—Warren Buffett

WITH THAT BIT OF TIMELESS WISDOM FROM THE SAGE of Omaha ringing in our ears, let us consider some findings from a recently completed study by one of our country’s oldest financial institutions.

Northwestern Mutual Life Insurance Company (founded 1857) has for the last 18 years conducted a study that, in the company’s words, “explores U.S. adults’ attitudes and behaviors toward money, financial decision-making, and the broader issues impacting people’s long-term financial security.”

Among the more interesting findings of the recently released 2026 edition of this exercise were the following:

• About 39% of Americans say they are investing or considering investing in high-risk assets such as cryptocurrencies, options, prediction markets, sports betting or meme stocks.
• Among the investors drawn to speculative assets, 73% say they are doing so because they feel financially behind and believe those investments could help them reach their goals faster than traditional approaches.
• That sentiment is particularly strong among younger generations. Roughly 80% of Gen Z investors who are considering speculative assets say they are motivated by the feeling that they need to accelerate their wealth-building efforts.

To me, this is the stuff of potential tragedy. Let me explain.

Financial advisors all but daily encounter people careening toward retirement—having invested too little too late, and now desperate to take what amount to moonshots. This is lamentable, and even sad, but it’s all too human. It doesn’t rise to the level of tragedy.

The looming tragedy of younger (never mind much younger) people taking fairly desperate risks such as those the Northwestern Mutual study identified is that they don’t have to.

Such is the historically powerful effect of compounding in mainstream U.S. equities. It’s been wisely observed that time is the single most powerful force in investing. And time is what younger investors have the greatest abundance of.

At the S&P 500’s hundred-year average annual compound rate of 10%, money doubles in seven years and three months. Then it doubles again in another 7.2 years. Then again in another, and so on. That said, since 1950 the S&P 500 has been compounding not at 10% but 11.5%, at which rate money doubles in six years and four months.

If these mathematical abstractions are starting to make your head hurt, let’s examine some real-world specifics.

• If you invested $1,000 in the Index in January of 1996—and added $1,000 a month, by February of this year you had (assuming you paid taxes from another source) $2.3 million.
• If you started 10 years earlier, in January 1986, you ended with $7.2 million.
• And if you (or your parents!) began this program 10 years before that—January 1976—you had $28.2 million.

That’s the power of compounding—perhaps all the more remarkable for the fact that the broad equity market effectively halved twice in the most recent quarter century.

And what did you need to do, throughout all the existential economic/financial crises of these tumultuous decades, to achieve this accumulation of wealth? Why, nothing, of course. In point of fact, it was critically important that you actually did nothing.

Successful long-term investing in mainstream equities isn’t supposed to be exciting. It’s supposed to be like watching paint dry, or grass grow. The critical issues are how much you invest and for how long. Everything else is commentary.

The longer your time horizon, the more the force of compounding has historically propelled you forward into affluence and even wealth. Time, not timing, was the fuel.

The writer Morgan Housel has wisely said that the question isn’t “What’s the highest rate of return I can get?” It’s “What’s the highest rate of return I can sustain for the longest time?”

The kamikaze waves of younger investors asking the singularly wrong question today—and reaching for returns by taking risks they don’t understand and don’t need to take—are embarked on a potentially tragic enterprise.

© 2026 Nick Murray. All rights reserved. Used by permission.