Be greedy when others are fearful – Stock Market

The stock market tumbled during the last week, just as the coronavirus has gone global so has the stock market losses. $3.4 trillion has been lost this week. Apparently, this sell-off is scarier than the 2008 crisis. However, I, as a long-term investor, am not worried.

If you take a look at the graph below, the dark blocks indicate recessions in the last 20 years, We have the dot-com bubble and the 2008 recession. If you look at how many points they dropped at that time before the recession occurred, we have not reached it. Although, what is worrying if that it dropped so fast this last week. If it continues tumbling then that is an issue. However, the current price of the Dow Jones Industrial Average as of February 28, 2020 is 25,409.36. It still has risen significantly since the beginning of the last recession, if you bought during the recession, you would have gained growth.

The market fluctuates constantly, as you can see within the last 20 years there have been drops and rises but statistically, the market has risen about 7% over the last 50 years. This is when adjusted for inflation, it is higher not considering that but it is not the ‘real’ number. That means, if we rely on history, we will be fine and the market will continue to rise over time.

I am long on the market and am 30 years young. If I retire at 60, I have 30 more years in the market.

Remember it is time in the market that matters not timing the market. 

So what should you do?

Now, I cannot tell you what to do but I will continue investing in the market. A sale is beginning. Unfortunately, a stock market sale is the only time people begin running to the doors. Let me put this in another analogy… if your house decreased in value by 15%, would you rush to sell it? Chances are that you would not. Consider this when investing in the market, do not sell everything. This is one of the hallmarks of the FIRE movement, building and accumulating enough assets so that it can sustain you through retirement. Buying on sale is one of the easiest ways to do that. 

If you want to start investing take a look at this post, where I compare Robinhood and Acorns.

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