It is a true shame that the WSJ contributes so much to the economic illiteracy plaguing the media and the American people.

This article, by Sam Goldfarb at The Wall Street Journal, talks about stock market investors and their “hope” that 2024 is a “return to long-lost normalcy.” Yet Goldfarb says investors can’t hope for a repeat of the 24% gain in 2023, which essentially “erased” the 2022 losses—but this is completely misleading. If you lose 24% in one year, you have to make a much higher return in the following year to make up for that loss.

For example: In 2022, the average investor started with $144,280 and at the end of the year they were down to $111,210—they lost 23%, or $33,070. To get back the $33,070 with the starting balance of $111,210 you would need to earn almost 30%, not just the 23%.

An easier example would be if you started with a $100,000 balance and lost 50%, you would be down to $50,000; to get back to the $100,000, you would have to earn 100%.

It is a shame that the WSJ, the government, and brokers act like they restore lost dollars when they categorically do not.

It is no wonder the country is so broke when there is so much economic illiteracy out there, including within the community of supposed-experts. 

It is the same reason we get politicians like Biden claiming prices are dropping, when all that is decreasing is the rate of price increase; prices are still rising.

Another misleading piece of information we see is that if wages are rising 4%, and inflation is rising 3.5%, then they say that wages are rising faster than inflation. The problem is that those are gross wages, and people don’t take home gross wages; they take home net wages, which is typically 70% of gross wages. Therefore, a 4% raise only yields 2.8% in increased purchasing power. That is why people can’t cover their bills, and why they are not enamored by Bidenomics. 

Basically, it is very easy to manipulate statistics, and once agian, the WSJ reaffirmed its status as a repeat offender.

Image generated by AI.