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More Americans drink coffee daily than invest in stocks

With stocks at highs, are you invested?

More American adults drink coffee daily than have money invested in the stock market.

Less than half, or 48%, of American adults have money in stocks, according to Bankrate’s Money Pulse survey. Compared to that, about 61% of adults have at least a cup of coffee daily, according to the latest National Coffee Drinking Trends.

The stock-owning Americans include anyone that has money invested in pension funds, 401(k) retirement plans, IRAs, mutual funds, ETFs or those owning individual stocks like Apple (AAPL, Tech30), Ford (F) and Tesla (TSLA).

The low number is an alarming trend for America’s financial future.

Daily coffee consumption has been growing in recent years, while stock ownership peaked in 2007 — just before the worst of the financial crisis and Great Recession, according to data from the Federal Reserve.

Related: Who’s getting rich off the stock market?

Missing out on the bull market: Americans who have kept their money on the sidelines are likely regretting it.

The U.S. stock market is in the midst of one of its longest surges in history. The popular S&P 500 Index, which tracks the 500 biggest and most well known publicly traded America companies, has risen over 200% since it bottomed out in March of 2009.

To put it another way, if you took roughly the $ 1,200 a year spent on buying a daily Starbucks (SBUX) grande caffe latte and put it in the stock market in March 2009, you would have $ 3,600 today.

stocks vs coffee

“Despite the market hitting record highs, retail investors have dramatically increased their allocation to cash,” says Suzanne Duncan, global head of research at State Street’s Center for Applied Research.

The stock market gains are only making the rich richer, exacerbating the nation’s inequality problems.

Related: Apple stock is making regular Americans rich

Why people don’t invest: The Bankrate survey identified a number of factors that keeps people from investing. The biggest problem by far is that people don’t have enough money to invest.

As CNNMoney has reported, median household income in America isn’t much higher than where it was in 1995. Many families simply aren’t seeing their finances improve enough to feel comfortable investing in stocks.

Related: Half of Americans are saving next to nothing

It’s particularly problematic among young adults. Just over a quarter of adults under 30 reported having any money in stocks or in funds that invested in stocks, according to the Bankrate survey. Young people have the most to gain by investing in stocks since research shows that they the market is likely to rise a lot in the decades before they retire.

The next largest barriers are that people don’t feel educated enough about the stock market, they don’t trust stock brokers, and they think it’s too risky to be in equities.

Randy Frederick, managing director of trading and derivatives at Schwab’s Center for Financial Research gets a lot of inquiries from fearful investors who aren’t sure they want to get into stocks or get back in.

“People often call and ask me: ‘What about the flash crash?'” Federick told CNNMoney. “I tell them that’s only happened once and the market came back. Let’s focus on the other 99% of the time.”

Related: Check your finances with CNNMoney’s retirement calculator

Related: The best advice for new investors

Related: The millennial investor raking in a 250% return


Why it’s risky to invest in pot stocks

marijuana pot stocks


Many investors have the munchies for the exploding marijuana industry. But if you’re passing on pot stocks, you’re not just being paranoid. They are risky investments.

Publicly traded marijuana companies are penny stocks, meaning they trade on the thinly-regulated and highly speculative over-the-counter markets. Penny stocks, regardless of the industry, tend to be far more turbulent than large cap stocks like Apple (AAPL, Tech30) and Facebook (FB, Tech30) that live on the major stock exchanges.

Investors also need to be aware of the uphill legal climb the marijuana business still faces. Yes, the legalization movement has some serious momentum, but marijuana is still illegal in most states and at the federal level.

“Very violent price action should be a big red flag to any investor, institutional or retail. That kind of volatility tends to signal there’s a lot of risk,” said Nicholas Colas, chief market strategist at ConvergEx.

Related: Colorado’s missing marijuana taxes

Dizzying stock moves: Even relatively large marijuana stocks are subject to frightening price swings. Just look at the rollercoaster ride Medbox (MDBX) investors recently went on.

Medbox, which makes automated dispensing solutions for medications and marijuana, skyrocketed from about $ 8 on December 18 to $ 93.50 on January 8. And then it plummeted back to $ 33 just two days later. Today, it’s right around where it started that wild ride at $ 11.

The case of Medbox is instructive because its market valuation of around $ 350 million easily makes it one of the bigger marijuana stocks. Investing veterans know that the smaller the “market cap” of a company, the riskier it tends to be. There are fewer shares changing hands, making it more difficult to exit a position.

Washington pot shops open for business

Related: Investors high on marijuana despite risks

$ 10 billion industry? None of this is to say that the marijuana industry is doomed to fail. There are intriguing dynamics that are luring investors as more states consider legalization.

ArcView Group, a marijuana research and investment firm, estimates the legal pot business will generate $ 2.6 billion in revenue this year, up from $ 1.5 billion in 2013. The firm believes that figure could swell to over $ 10 billion in five years.

“Selling marijuana is hugely profitable. Just be careful how you choose to play the industry,” said Colas. “Is it a good business? In the abstract, absolutely. Is it investible? That’s where it gets risky.”

Related: The job search app for the legal pot biz

Part of that risk stems from the fact that penny stocks are not held to the same regulatory standards as more traditional stocks.

Visitors to the website of American Green (AMNE), formerly The Tranzbyte Corp., are greeted by a message that warns potential investors they won’t be afforded access to regular company audits. In other words, investors have to just take the medical marijuana dispensary at its word.

American Green admits that can put investors at a “significant disadvantage from a risk standpoint.”

Related: Want to study pot? There’s a school for that

Shady activities: As you might suspect, there’s also a certain level of questionable judgment involved in some corners of this market.

For example, earlier this year Resource Ventures (REVI) released a statement saying it secured the consulting services of Hemp (HEMP) to help aid its expansion plans into the medical marijuana and industrial hemp industries.

In the official statement, Resource Ventures said the deal will allow it to “take advantage of the explosive growth and stock feeding frenzy currently occurring in the industry sector.”

It’s hard to imagine a large public company talking about a “stock feeding frenzy” in a public statement.

In another example, the Securities and Exchange Commission temporarily suspended trading in shares of GrowLife (PHOT) in April. The agency cited “questions that have been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions” in its shares.

Related: Tourists flock to Colorado to smoke weed

That suspension triggered GrowLife, which plans to supply equipment to marijuana growers, to default on some debt.

In a subsequent SEC filing, GrowLife highlighted a number of other risks facing its business, including the fact that it’s dependent on the evolving legal landscape.

So if these penny pot stocks are too dangerous, what’s an investor to do if legalization gains further steam?

“If you begin to get a feeling that marijuana will become legal in our lives at a federal level, you probably should look at tobacco companies because they already have the manufacturing and distribution facilities,” said Colas.