The Market Is A Beast
Over the recent past I’ve been writing a bit on investing over the long-term and putting your money to work with the help of compound interest. The truth is this: historically the market always performs. It has been a great vehicle to take advantage of the growth of your savings and earnings. During the last couple of weeks we saw the market somewhat pullback below the 15,000 mark because of instability in Syria. I was actually in the process of funding my account so I could get in on the dip and here I am today looking at my screen with the Dow back to 15,500 and having to purchase nearly 5% higher than when I was looking at it last week. Needless to say I’m writing this a bit disappointed but I say that to show a minor example of the market reacting to news and then continuing strong.
In the past 12 years, we have had a few incidents where major hits were taken in the stock markets across the board. About a week ago, the world was reminded of, by the anniversary of it, the events that took place 12 years ago on September 11, 2001. This attack was not only meant to be an attack on lives but also an attack to the financial markets in the world. Regardless of the politics of who perpetrated the attack, many probable goals of it were met. The markets were shutdown for about a week and when they reopened on September 17, the Dow fell 7%. This was the worst one-day decline in history and the fall had doubled over the week. A total of $1.2 trillion dollars went up in flames.
It took one year for the market to bottom and for another bull market to commence.
In 2008 we had the collapse of the four largest investment banks in the United States. Stocks lost 57% of their value at the high of 2007 to the low in 2009. This was no doubt a mother of all bubbles with low interests rates, government insured loans, and an economy that was standing on air. This bubble bursting was pretty substantial; causing a chain reaction to occur that started with a housing bust, loans that needed to be paid, businesses closing, and people losing jobs. If you include the financial impossibilities the government is facing, the future would seem to be pretty bleak.
Since then, the market is up 147% from the bottom of 2009. Even if you had invested in the stock market at its absolute top in October 2007 and held on until today, you’d be up nearly 7%, and that is not including dividends! This of course is not the goal but the reality is that if you were a prudent investor, putting money in the market monthly for 10-30 years, you’d be up substantially more than that.
An interesting thing to note is that the only time you could have lost money over a 10 year period in the past 100 years is if you actually sold into the panics of the stock market crash of 1929 and 2008.
I wanted to touch on this because when it comes to panicking when current events on the news come around, history shows that markets will recover and life will go on and those that actually lose their bearings and sell solid assets will actually end up losing the most over the long-term.
More problems arise when you are day trading with stocks and investment vehicles that are meant to be held for extended periods of time.
In my experience, the market moves very quickly and it generally outsmarts even the best of us when we think that we are in front of the beast. Usually what happens when you try and make different decisions getting in and out of things on a month to month basis, over time, the market wins.
The good news with things like quality stocks and real estate (for this matter) is that they go up over the long run and it’s important to be in the game to actually benefit from FLUCTUATING rising assets. It is extremely important not to underestimate the power of the broad markets to make you money and to lose you money if treated carelessly.
I will be making my purchases of the Dow Jones and some other forever stocks over the next week.
If you are not familiar with what I consider Forever Stocks, you definitely need to sign up for the FutureMoneyTrends.com Smart Money Reports newsletter.
It’s absolutely free for 30 days, and it is here where a team of us dig through tons of research to find the most undervalued companies out there that you should be investing in to give you the biggest bang for your buck for literally decades!
Imagine only investing in companies that were undervalued? What would that mean for your future and the future for your children?
If you would like to find out what companies I will be purchasing, please visit this link and look for our Legacy Portfolio after you have your login information.
To your success,
Editor at CrushTheStreet.com