No One Ever Made A Dime Panicking!

The last couple of weeks have been very tough for the stock market. Stocks have been under a great deal of selling pressure due to the trade war with China.

Last week I was talking with a friend of mine who urged me to “watch my stocks and be careful”.

I didn’t ask her what she meant by that, but I could pretty much guess that her advice would be to sell if the market got too volatile or scary. I certainly don’t think she was advising me to buy more stocks as the market went lower.

I then gave her the same advice that I give to readers of my blog: No one ever made a dime panicking!

From 1950 to 2019, the S&P 500 has gone up more than 100 times in value. During this same time period, the following events have taken place:

1. Nine recessions

2. The Korean War

3. Rising interest rates

4. The Red Scare

5. Kennedy’s assassination

6. The Civil Rights Movement

7. The Vietnam War

8. The OPEC embargo

9. Double-digit interest rate increases

10. The Beirut Embassy bombing

11. The U.S. bombing of Libya

12. Black Monday, in which the market fell 22%

13. The savings and loan crisis

14. The Iraq War

15. The housing slump

17. The Asia financial crisis

18. Long Term Capital Management’s collapse

19. The Russian financial crisis

20. The September 11, 2001 attacks

21. The Afghanistan War

22. The bank crisis

23. The housing Crisis

24. The European debt crisis

25. The China slowdown

26. Brexit

27. The US/China trade war

As you can see, we have seen our fair share of economic and geopolitical crises over the last 69 years. Yet the market has been extremely resilient.

In 1950, the S&P 500 was around 80. Today it is at 2,859.

If you look at the history of the stock market, you will see that there is absolutely no need to panic when we’re faced with something like the current trade war. I can’t tell you when it will end, but I can tell you that it will end.

Neither America nor China wants this to go on for years; economically, both nations have something to lose.

This is just another bump along the historical road – nothing more.

The biggest mistake you can make right now is to sell your stocks because of this short-term uncertainty.

Even if you own a company like Apple (NASDAQ: AAPL) or Starbucks (NASDAQ: SBUX) which has a lot of exposure in China, I would just sit tight and wait.

This too shall pass.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

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Don’t Be Afraid of Owning Stocks!

A few days ago, I met a 22-year-old young man who disclosed to me that he’d opened an IRA account.

I was impressed at the fact that he even knew what an IRA account was, given his background. He was an African-American male from a low-income household; terms like “investing” or “IRA” are typically not terms you hear in a low-income household.

I asked him how he learned about IRAs. His answer was “by reading”.

I then asked what stocks he owned. He told me that he did not own any stocks…because he was afraid to.

I suggested that he buy a copy of my investment guide, The Stock Market is For Everyone, and let me know if he had any questions after reading it.

Fear of the stock market is a sentiment shared by many people. Especially minorities. It was a major motivation behind my writing this guide to begin with.

When you grow up in a family that is financially illiterate, you learn many things about personal finance – and most, if not all of these things, are wrong.

You don’t learn the importance of net worth.

You don’t learn the value of having good credit.

You don’t learn to stay out of debt.

If you hear about the stock market at all, the only thing you learn is that it is just for the wealthy. You may also have been told that it’s like gambling, and that the market is “rigged”.

It’s interesting how someone that knows absolutely nothing about the stock market can come to these conclusions!

Like I’ve said in the past…ignorance is not bliss!

Here some reasons why you shouldn’t be afraid of the stock market:

1. The stock market has an upward bias. From 1932 to 2019, the Dow Jones Industrial Average has gone from 800 to over 26,000.

2. The stock market is the single best wealth-building vehicle for the average person. Investing a modest amount in some of the great companies of our time could have created incredible wealth for you over time.

3. Understanding the stock market will make you better at managing your personal finances. 

4. The stock market has bounced back – and bounced back BIG – from EVERY crash throughout its history. In fact, the bigger the decline, the stronger the bounce back!

Fear of losing money in the stock market is common among people with very little knowledge of how it works.

For many years, I was one of those individuals. I did not fully understand how the stock market worked, and I was uninvested. For me, it wasn’t because of fear that I stayed out of the market. It was due to a lack of historical knowledge of the stock market’s ability to create massive wealth by simply buying and holding stocks.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)