The is-is-ought fallacy in action.
“In the last 20 years, we’ve had a financial economy that has grown
significantly,” said Joseph LaVorgna, chief economist for the Americas
at Natixis. “You could have argued a few decades ago that the stock
market was not the economy, and that was very accurate. That is no
longer the case today.” ...
Through the end of 2021, the share of household wealth that comes
from directly or indirectly held stocks hit a record 41.9%, more than
double where it was 30 years ago, according to data from the Federal
Reserve. A host of factors, from the advent of online trading to
stock-friendly monetary policy to a lackluster global economy, has made
U.S. equities an attractive place to park money and earn nice returns.
Asset allocation is about diversification, and if 42% of your wealth is tied up in stonks, YOU ARE NOT DIVERSIFIED, no matter how diversified is the stock portion of your portfolio.
The Talmud had it right: One third in hand, one third in land, and only one third in business.
Be it then, as Sir Robert says,
that anciently it was usual for men to sell and castrate their children,
Observations, 155. Let it be, that they exposed them; add to it, if you
please, for this is still greater power, that they begat them for their
tables, to fat and eat them: if this proves a right to do so, we may,
by the same argument, justify adultery, incest and sodomy, for there are
examples of these too, both ancient and modern; sins, which I suppose
have their principal aggravation from this, that they cross the main
intention of nature, which willeth the increase of mankind, and the
continuation of the species in the highest perfection, and the
distinction of families, with the security of the marriage bed, as
necessary thereunto.
-- John Locke, First Treatise of Government
42 is not the answer to everything.
