
The stock market suddenly drops 10%, 20%, 50%.
What do you do?
1: Stop adding new deposits to your investment accounts.
2: Sell your investments and wait in cash until the dust clears.
3: Start interviewing new financial advisors.
None of the above. The correct answer is 4: Stick to your long-term plan, and if you are invested smart, using science based investing, maybe consider investing more while the markets are giving you a discount!
One of the HARDEST parts of investing is managing your emotions when markets are bumpy and everyone is predicting doom and gloom.
Checking your portfolio every day is one of the worst things you can do.
Why?
Because the more often you look…
The more opportunities you give yourself to panic for NO clear reason.
Some facts about the stock market (S&P 500):
Day to day, the stock market is up about 50% of the time and down 50%—a coin toss.
On a yearly basis, it’s up roughly 70-75% of the time.
On a 10-year basis, it’s up about 94% of the time.
And on a 15-year basis?
It’s 100% up.
And you can improve the odds of the statistics further than the one above, by using evidence based investing, through asset allocation and not just invest into the US.
Daily ups and downs are just noise.
What matters is the trendline up over time.
How do you stay focused on the big picture?
a) Stop checking so often. Think in 5 year blocks, not daily intervals.
b) Review the data and evidence. Over the long term, the market trends up and if you position smart, you can capture higher gains than the index.
c) Have a plan. A good investment strategy is built for the ups and downs.
d) All investing success is goal-focused and planning-driven.
e) Investing is about building wealth for the future, not reacting to the present.
So next time the markets are low and you’re tempted to check your portfolio for the 3rd time for the week, ask yourself:
“Am I thinking like a successful long-term investor or a day trader?”
True financial freedom comes from patience, not panic.
If you and your friends would like to find out more about science based investing on large amounts of wealth, we will be happy to connect to see if there is a match, as we still have capacity to add value!