I'm looking to research the arguments against investing, or at least arguments that present a rather different view of investing than is the conventional wisdom. By "investing", I mean putting money at risk of significant or even total loss--other than inflationary loss--by buying non-guaranteed assets. I'm particularly thinking in terms of stocks, but to some degree in bonds, metals, land, etc.

The conventional wisdom seems to be something (very roughly!) like this:

  • Investing is motivated by making one's money work for one's future self.
  • Owning stocks and bonds is, generally, the best way to do this.
  • This is because, historically, the stock market and bonds have returned x% ROI, where x > other vehicles' ROI. x seems to be quoted as something between 4-10%.
  • Each person's "needs" and "situation" are different, and so there are different rules for how to do this for each person. E.g. older people should be less risky.
  • An IRA invested in various mutual funds is a particularly good and convenient way to invest for most people.
  • There are ways to invest that modify one's risk or chance of gain, such as diversifying, Modern Portfolio Theory, dollar cost averaging, etc, and by adopting these strategies one can be confident that one is likely to do better than one who does not adopt them.

What I'm looking for are substantiated/evidence-based, well-reasoned counterpoints to this conventional wisdom.

Note: I am not asking the SE.PF&M readers to give their opinions about this--that would not a good question here. Instead, I am asking to point me to quality sources for these sorts of arguments.

For example, the historical evidence of past market performance could be questioned in a scholarly article that looks at other historical trends that, though they lasted 200+ years, ultimately came to an end. Or it could have a technological spin, suggesting that as markets "heat up" in terms of transactions-per-second, instabilities begin to form that didn't apply in, say, 1985. Or, it could be a legal analysis, showing how deregulation of yadda yadda has now caused blah blah blah. Or, an economic analysis. Or a sociological, discussing U.S. population trends. Or even something arcane, like game theory or chaos theory.

EDIT: Might the idea of the Taleb Distribution, inspired by ideas from Nassim Taleb in his book Fooled By Randomness be one specific example I could include along these lines?

EDIT: I'm asking this because I think it is both intellectually interesting as well as practically important, and because I tend to feel that pro-investing rhetoric seems to operate in an echo chamber in which disconfirming evidence is filtered out. Of course, I may be wrong about this and therefore if everyone on this site responds that there are no such (credible) arguments--beyond those inspired by Taleb's writings, if that is such as I think--then that is an answer in itself.

FINAL EDIT: I think this question answering process just went off the rails, despite my trying to constrain it. Simply put, I wanted to know substantiated and published reasons why one would probably be better off, long-term finances-wise, saving money in CDs than investing in a stock portfolio. People triggered on the point about risk too much; sure, all life is risk, I get that, but perhaps my wording just led things down that path. I'm happy with forgetting about this question, since it seems SE.PF&M has a strong pro-stock market investing bias and so far has no representatives against this conventional wisdom.

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    You're asking for some speculative sources and conspiracy theory sites? I'm not sure its relevant to this site, or in any way constructive. Why don't you tell us instead why you're looking for this? Maybe then you'll get some more helpful pointers.
    – littleadv
    Commented Feb 7, 2012 at 19:56
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    @littleadv No, where did I say conspiracy theory sites? I was quite careful to describe that I wanted "substantiated/evidence-based, and well-reasoned" counterpoints, and provided a paragraph of possible examples as well as a specific example of a popular book written by an economist. That you suspect I want the guys with the tinfoil hats suggests a knee-jerk reaction of "if it isn't pro-investing, it's just plain crazy talk!".
    – Chelonian
    Commented Feb 7, 2012 at 20:06
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    There's always the Pete Townshend argument- that you hope you die before you get old. Commented Feb 7, 2012 at 21:22
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    Voting to close. The comments are showing this as non-constructive.
    – gef05
    Commented Feb 8, 2012 at 15:09
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    @poolie - the question may be interesting, but not constructive and not suitable for this site. Its a philosophical/argumentative question that opens a discussion, and here is not the place for such questions.
    – littleadv
    Commented Feb 8, 2012 at 23:20

5 Answers 5


I think you're confusing risk analysis (that is what you quoted as "Taleb Distribution") with arguments against taking risks altogether.

You need to understand that not taking a risk - is by itself a risk. You can lose money by not investing it, because of the very same Taleb Distribution: an unpredictable catastrophic event.

Take an example of keeping cash in your house and not investing it anywhere. In the 1998 default of the Russian Federation, people lost money by not investing it. Why? Because had they invested the money - they would have the investments/properties, but since they only had cash - it became worthless overnight.

There's no argument for or against investing on its own. The arguments are always related to the investment goals and the risk analysis.

You're looking for something that doesn't exist.

  • Just to be clear: I am aware of inflation risk. More generally, I agree with you and don't believe there is any 100% guaranteed safe storage of wealth, since wealth is really just a social convention and those can collapse. That said, my question is seeking arguments against the conventional wisdom of investing. Don't let the Taleb stuff be weighted much in this; I perhaps shouldn't have thrown that out but was trying to be helpful in promoting answers.
    – Chelonian
    Commented Feb 8, 2012 at 2:14
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    @Chelonian I haven't mentioned the inflation anywhere in my answer. As I said - you're looking for something that doesn't exist. There are no arguments, neither in favor nor against "investing" as a purely abstract thing. All the arguments you'll find will relate to some goals and some risks.
    – littleadv
    Commented Feb 8, 2012 at 2:39
  • The inflation point was from the link, not your words, right. Thanks for the input, I'll see if there are other answers.
    – Chelonian
    Commented Feb 8, 2012 at 4:02
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    @Chelonian have you read the last sentence of my answer? Because you said that that what you would regard as a correct answer, yet you downvoted my. Re your final edit, you're trying to insult people just because you didn't get what you want. Well, this site is not for 5-year olds. There's no bias, at least not on my side. On yours however there's.
    – littleadv
    Commented Feb 9, 2012 at 19:50
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    @Chelonian yes, you're looking for a round cube.
    – littleadv
    Commented Feb 10, 2012 at 18:51

There are two interpretations of your question.

Every dollar you earn must be either invested or spent. That is, you keep the dollar in the form of a capital asset, one that you expect to return more than its cost over time, or a non-capital asset, like a beer, a movie-ticket, or a shirt, that you will simply enjoy consuming or owning.

(A very few purchases, like a house and an education, can be regarded as both capital and non-capital, but ignore that for now.)

Obviously, no one argues that you should never spend and always invest (you'd starve in a week), or always spend and never invest (you'd starve in the first downturn in your income).

There are those that argue that investment has been over-emphasized. The most famous proponent of this theory was John Maynard Keynes, who discusses the so-called Paradox of Thrift in his work The General Theory of Employment, Interest and Money. People who believe this will generally argue for moving income from investment-preferring classes to spending-preferring classes via such strategies as progressive taxation and the minimum wage.

But your edits suggest that you are interested not in investment vs. spending, but in high-risk investing (like stocks and commodities) vs. low-risk investing (like CDs, savings account, and cash).

But make no mistakes, every investment has risk: gold can be stolen, government bonds can be defaulted on. Something can always go wrong.

Every person has some appetite for risk. One person might keep all his money under his mattress, while his twin brother is buying into tech startups.

Your question seems to be, is there an argument that people systematically take on more risk than they should?

Yes, some people:

  • someone who invests other peoples' money will often participate in the upside but not in the downside. "Money-managers" for example, might charge 2% of the principal but 20% of the return. This creates an agency problem, and they will choose riskier investments than their clients would have.
  • some people simply enjoy risk. A dollar won is far more pleasant than a dollar lost is unpleasant. This can manifest itself in gambling addiction (and investing is just a form of gambling with a positive expected return).

But just like the investing/spending decision, the low-risk/high-risk decision is a personal one, based on personal preferences and personal situations. It's difficult, and somewhat arrogant, to make an argument for the decisions made by billions of individual people being categorically wrong.


Oh, geez, well-regarded arguments against investing, hmm? Well, I have a couple. They're not against investing per se. They're asking about your priorities and whether you might have something better to do than investing:

And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully: and he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits? And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods. And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry.

But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided? So is he that layeth up treasure for himself, and is not rich toward God.

— Luke 12:16-21

Christian or otherwise, there may be better things for you to do with your excess cash — indeed, with your life — than simply invest it to bring yourself more money. Many people find charitable contributions more important than spending a little more money on themselves (immediately or in the future). Of course, you will need to decide what these things are that matter to you. Perhaps you would like to contribute to traditional charities. Perhaps you would like to fund education, or a religious organization, or the Democratic Party, or the Republican Party, or the Libertarian Party, or the Green Party, or the Tea Party, or Occupy Wall Street. Perhaps you'd like to fund research into something. Perhaps you simply have friends and family that you want to make happy. Perhaps a small vacation to spend time with family is worth more to you now than the investment returns will be worth later.

Moreover, note that economic decisions like this are made on the margin — it's not so much a question of whether you invest at all, but whether you should invest more or less, and spend/donate more or less.

I made me great works; I builded me houses; I planted me vineyards: I made me gardens and orchards, and I planted trees in them of all kind of fruits: I made me pools of water, to water therewith the wood that bringeth forth trees: I got me servants and maidens, and had servants born in my house; also I had great possessions of great and small cattle above all that were in Jerusalem before me: I gathered me also silver and gold, and the peculiar treasure of kings and of the provinces: I got me men singers and women singers, and the delights of the sons of men, as musical instruments, and that of all sorts.

So I was great, and increased more than all that were before me in Jerusalem: also my wisdom remained with me. And whatsoever mine eyes desired I kept not from them, I withheld not my heart from any joy; for my heart rejoiced in all my labor: and this was my portion of all my labor. Then I looked on all the works that my hands had wrought, and on the labor that I had labored to do: and, behold, all was vanity and vexation of spirit, and there was no profit under the sun.

— Ecclesiastes 2:4-11

Because in the long run, we're all dead.

Anywho! It's all a matter of returns and risk analysis. Even spending on yourself and charitable giving can be thought in these terms (the returns are not 'more money', so they may be harder to analyze, but they're important too).

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    Hmm, I think the point of Luke 12 is not that investing is bad, but that it's naïve to suppose that you control the universe. Confer Matthew 25:14-29, where the men who invest are praised but the one who fails to invest is condemned. But yes, I'd certainly agree with what I think is your general point, that maximizing your personal wealth is not the best or only worthwhile thing in life. C.S. Lewis once said that if there are not things that you would like to do but you just can't afford because of your charitable giving, than you are not giving enough.
    – Jay
    Commented Sep 23, 2015 at 15:30

One specific example that is in fact often cited here and elsewhere is when you receive a financial windfall. Coming into $10M overnight is much different than coming into it over the course of decades. In the face of uncertainty and high emotions, it is rational to park your money in the bank until you figure out what to do with it.

The argument extends beyond emotions of the moment, though. Many people who receive windfalls are athletes, artists (actors, musicians, etc.), lottery winners, and people with lots of family drama. These people often lose their money as much to being taken advantage of as they do their own reckless spending. In the face of social vulnerability and their own ignorance, these people are often advised to not "invest" in anything until they're in a good spot.


One argument against investing in the sense of "putting money knowingly and deliberately at risk" is that the psychological effects can be immense and are extremely hard to quantify. This means that in any sort of risk analysis these psychological effects represent a dangerous, potentially fatal unknown variable.

Any human investor is not fully rational and there is no precise way of calculating the risk emanating from this.

Example 1:

  • Who actually measures the rise of the Cortisol level in their blood (both short and long term) caused by investing 100k in the stock market instead of leaving it in an alternative "safe haven"?

  • Even if one carried out such a measurement to quantify the "stress level" caused by the investment, which cost (in dollars) would one assign to a long term rise of say 1% of the Cortisol level?

Example 2:

  • Who actually measures the time they spend checking the returns on their investment (for example, by logging into some website, opening an app, checking real estate price indices, etc.), reading news that could potentially influence the value of their investments (which might even happen unconsciously! Suddenly the economy part of the newspaper becomes interesting...), or in forums like this ?

  • Even if one did this, which cost (in dollars) would one assign to it?

Example 3:

  • Knowing that "your invested money is working for you", you might (unconsciously) feel less pressure or motivation to work hard yourself. After all, given that your investment gained 20k last year, why should you spend time in that boring continuing professional development seminar next week? These effects can lead to a lower income in the future.

  • How could one assign a precise cost to this?

In principle, one would have to take all these costs into account when investing. Note that for these issues it is irrelevant whether the "safe haven" is actually safe or not. All that counts for the psychological effects is the subjectively, or even unconsciously, perceived risk.

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