“It’s never going to get better.”
This is a quote from a friend of mine who I spoke with last week. He was upset that his portfolio was down around 20% since the market peak in 2021.
My friend is well off and retired young, but he needs his money to last his lifetime. A 20% haircut is understandably scary to him.
After his statement, I asked him, “So the market will never go up again?” He answered that no, it won’t. He added, “I’m totally serious.” He then laid out all of the problems out there, asking how the market could go up when the world is falling apart.
We certainly have big problems – financial, political, cultural and more. But we always have.
I asked him if it was worse today than in March 2020 when the entire world shut down because of a virus that we knew nothing about at the time. Or in 2008 when the world’s blue chip financial institutions were crumbling. Or when the U.S. was attacked by terrorists, or when inflation was over 13%, or when there were lines for gas, or when a U.S. president resigned in disgrace, or when the world was at war…
You get my point.
I reminded my friend that during all of these volatile periods of American history, when things were quite bad, the markets recovered and went on to new highs, as they have since they were created.
The Stock Market Will Recover
I further pointed out that the markets had done so because of people just like him. My buddy created software that changed a niche industry. That’s how he was able to retire early. He was also involved in another tech-related startup. He is currently working on a prototype for what could be game-changing technology in a different sector.
“People like you find solutions to problems. And when they do, they and their investors can make a lot of money,” I said. There are lots of problems and a ton of people out there working on them. Human ingenuity and the ability to make money off that creativity are what drive the market.
As long as there are people trying to make the world a better place – whether that means cleaner, more efficient energy or a tastier burrito – capitalism and the market will thrive.
Being scared when the market falls is perfectly natural.
We have big, difficult problems, and our leaders in Washington are more concerned with making the other side look bad than actually working on the issues.
But it’s not different this time.
The market goes up over the long term. The way to preserve and grow your wealth is to stay invested, not hide under a rock…