As I write, the market’s in a nose dive. Panicked investors are running for the exits.
Please tell me you’re not one of them.
By the time you read this, stocks may have recovered. Or not. The only certainty is that, long term, the trajectory has always been up.
Besides, price swings only matters when you sell. It’s called the Rule of the Roller Coaster: You only get hurt when you jump off.
I discovered this the hard way. My first foray into stocks came after my divorce, in 1986. My broker sent me all kinds of reports and statements, none of which I understood, so I threw them away.
A year later, Oct. 1987, the market tanked…big time! I freaked out, called my broker, told him to sell everything. He begged me not to.
“The market will go back up,’ he said, “It always does.”
I didn’t care. I wanted my money where it was ‘safe’. Of course, the market rebounded, quite quickly. If I stayed put, I’d be a lot richer now. But I learned my lesson.
Fast forward, 10 years later. October, 1997. Prince Charming Isn’t Coming had been published. I knew a hell of a lot more about investing.
Again, the market plummeted. This time, I’m on the phone calling Schwab. My now 2nd ex-husband was upstairs, pacing the floor, in a frenzy about his finances. My teenage daughter comes downstairs, sees me on the phone, asks what I’m doing.
“I’m buying stock” I tell her.
“But mom,” she says, “The market’s crashing.”
“No, Anna” I say. “It’s a sale!”
I understood it then. I understood that eventually the market would go back up…I didn’t know when, but I knew it would.
Sure enough, in the 20+ years I’ve been invested, despite living through at least 8 market crashes, not just corrections like now (when market falls 10%), but full on crashes (when the market plunges 20%), I’m proud to say, I’ve done very, very well for myself.
The secret to success in investing is sticking to a long term approach. Otherwise, you’re not investing. You’re gambling.
What’s your reaction to this crazy market?
If you enjoyed this Words of Wealth, click here to receive a copy in your inbox every week.