Coming off the elections and looking toward the future, especially if you listen to analysts and pundits, everything is gloom and doom. Many are predicting a rough financial road ahead. And because of that, some will advise against investing in the stock market. This is a time to take pause and to really educate yourself before buying into all of the hype. Before stuffing your money under a mattress or halting investing, let’s look at things critically and get a good understanding of the stock market, so you can make informed decisions rather than those that are reactionary and emotional. I’m betting when you critically think about the stock market, you will not be so hesitant to invest in it but will actually understand that NOW is the time to invest.
First, ask yourself whether or not you would bet against yourself. In other words, how likely are you going to bet that you are going to fail? Of course, we wouldn’t bet against ourselves, but that is exactly what betting against the stock market is. It is betting against ourselves. How? Why? Well, we ARE the stock market. It is you and me and the companies that fuel our economy. This can be only those companies in the United States or in the whole world if we are thinking about global investments. So, investing in these companies is us investing in ourselves, our companies, our country, or our world that we will not fail.
Paring that down, investing in an index fund or an ETF, an exchange-traded fund that is a collective investment such as $VTSAX or $VTWAX respectively, means you are investing in all of those collective domestic or global companies. For these to fail on a long-term basis would actually mean that every single company in that collective pool would have to go out of business. Again, every single business in that pool would have to cease operations. Logically, those odds are pretty slim.
All of these companies are not all going to collapse. We are consumers. We fuel companies. Because of us, companies continue to grow, to produce goods and services, and to create new and revolutionary things. Of course, these companies are also concerned with their bottom line which is another thing that fuels the economy and is another reason why these companies collectively will not all collapse, acquisitions aside. We are a capitalistic and consumerist society, so businesses will continue to make money, and we will continue to buy goods and services.
Again, some analysts spin doom, noting how regulations and governing bodies collapse things thus wrecking the economy and ultimately the stock market. Remember that everything is cyclical and things ebb and flow. So, take out the emotions and rashness and think about all of this rationally. We change and grow; we advance which is a good thing. I don’t know about you, but I enjoy the comforts we have today and wouldn’t want to go back decades to times when there was little to almost no technology or even comforts that we take for granted today without a thought. But as we change and grow, as we adapt just as we ALWAYS have, so will technology. This leads to good changes and an improved society. It also means companies will adapt, strengthening themselves or becoming obsolete. That is capitalism.
So, why all the hype and fear about the stock market? Unfortunately, society tends to buy into the latest hype. In addition, we often have a limited view of the world, only keeping in mind our own perception, circumstances, and biases. But our country is a big place, and the world is wonderful with much to discover. Thinking about being a global world is beyond what many want to comprehend. The masses continue to buy into human biases and limited information. I beseech you to educate yourself in order to break away from all of the misinformation and near hysteria that is being pushed. Don’t follow the masses that go along blindly.
Understand that many are reacting from fear because we don’t like when things are taken away from us. So, when the stock market corrects itself, pulls back, and changes, causing people to think they are losing all of their resources, people react from fear and respond poorly. This is EXACTLY the right time to see and understand the bigger picture. Don’t buy into the propaganda that all of the Doomers are spewing. They are trying to influence the masses to their advantage. There will always be naysayers out there. Educate yourself against them.
The stock market will NOT fail because we will not fail. We are the inventors, the creators, the pioneers as well as the consumers who fuel our economy and will continue to carry our country and our world to new and interesting places. We are the stock market. We may change and adapt, but we will not fail.
So if you still find yourself unsure of how to proceed and navigate this market, here are three things I suggest you do so that you don’t panic, end up selling, and lose an opportunity to make money.,
#1 Turn “off” the news. I’m not advocating for you to be uneducated, but unfortunately ratings drive the Media and the Media LOVES the gloom and doom shows. That’s what sells. Focus on educating yourself on personal finance and the stock market history. Read and listen to the news with an educated and informed mind. Read and listen to a variety of outlets to get a well-rounded perspective if you want to truly be informed. Many say history does not repeat itself, but it does rhyme. We can learn so much from the past.
#2 Do not check your portfolio daily. This is a time to let it ride. Again, being educated will help you understand that the market is never static. It is not supposed to be. There will be constant changes. You know we are the market. Think about the daily habits and patterns of people. Keep in mind what is going on such as Christmas spending, holiday travel, etc. Our daily habits and buying will drive and CHANGE the market. Remember to think globally as well. The volatility and daily swings may worry you, but as long as you are not imminently pulling from your accounts, sit back, and let them ride the waves that are inevitable.
#3 DO NOT STOP INVESTING! Think of it this way. Right now the stock market is on a MASSIVE sale. But the sale will end and everything you bought will be worth so much more than you paid for it! So now is a great time to buy. Don’t pass up this opportunity because you are listening to hype from the media that is just spewing disinformation and being disingenuous.
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