This is not a quarterly market prediction. This is not a 2022 investment forecast.
It’s simply an essential truth to realize as a long-term investor.
The stock market will go down.
Embracing this premise is the pathway to experiencing growth in your portfolio.
What scares people out of investing is not this truth. They know this in theory at least. If they have any financial advisor worth their salt, they’ve discussed risk.
It’s one thing to know something in theory. It’s another thing altogether to experience it. Seeing numbers in the red on a hypothetical illustration is entirely different than seeing those same numbers as the value of your accounts on your monthly statements.
We are happy to embrace the probability that the stock market will go down when it’s consistently going up. Not so happy when it’s consistently going the other direction.
You know what? Let me restate what I said before: the pathway to experience growth in your portfolio is not recognizing that premise but enduring that experience. Unexperienced hard truths are easy to believe. Experiencing hard truths and still believing them is much more difficult.
To paraphrase a quote attributed to famed investor, Peter Lynch, preparing for, and acting on the fear of losing money in the stock market has lost more money than being invested in the stock market itself.
This doesn’t mean you should put all your money in stocks. Investment allocation and risk management go hand in hand.
It does mean that making money over the long term in the stock market normally requires remaining appropriately invested and investingwhile the stock market goes down.