Here we are again. I’ve lost count. How many sell-offs is this since last year at this time?
Here’s a big smack in the face for those selling into this stock market.
As usual, the average guy is dumping stocks like they’re on fire. Even my bond buyers are jittery.
[ad#Google Adsense 336×280-IA]No matter what the market does, they’re making double-digit annual returns on some of their bonds.
And yet they still want to join the lemmings.
It is amazing! But I’m not surprised.
I realized a new depth to the fear the retail investor feels the other day when the guy who cuts my grass asked me if the whole market was going away.
“What? Going away?” I asked.
“Yeah, you know, everything gone.”
Even after 25 years of working with the average investor, it still shakes me to my core when I realize how bad the available information is out there and how most people have a complete lack of understanding of investing.
But it’s easy to see why.
Take a note sent out by one of the European bank’s economists telling their customers to sell everything except high-quality bonds. Everything!
Are you kidding me? Don’t get me started on economists, the “alchemists” of our time!
The track record for economists and anyone else who has been foolish enough to have ever made such a ridiculous call is nothing short of a joke.
And these freaks are everywhere in a market like this!
Could they be right? For one moment in time, yes. But that’s it. This kind of irresponsible market call is why people have huge net losses.
Here are some real facts that might help keep you in the only place you will ever make money: in your investments. Not the stocks you plan to trade, but your investments. And there is a difference.
In the last two decades, the S&P has averaged 9.9% a year. The average retail investor has earned about 2.2%.
Why? Because he listens to anyone who says the world is coming to an end and because he buys when all the idiots in the money press and media are talking about a sell-off, and then he finally sells after everyone else has.
Not convinced yet?
For the past century, the stock market has doubled in value roughly every eight years, and there is no five-year period where stocks did not have a positive return.
Stocks fall, but then they recover.
History tells us that the markets have endured plenty of horrific periods; frightening events have taken place – wars, scandals, social unrest – and yet stocks still post steady gains.
Paying any heed to the current headlines and cries of collapse is nonsense.
There is not one study that will support selling in a panic or buying when everyone is talking about new highs.
Everyone is terrified. Everyone is asking if the market will collapse and go away. Everyone is worried about their retirement.
That is a buy signal – not a reason to sell.
Can’t bring yourself to buy? I understand; it can be tough.
At the very least, don’t sell your investments because of a panic. If you do, don’t expect to do anything but rack up losses.
Don’t be this year’s loser. Get a long-term time horizon for your investments (the experts recommend 10 years) and ignore the lemmings.
Good investing,
Steve
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Source: Wealthy Retirement