Stop Worrying About the Next Stock Market Crash
Here’s a slap for all the market crash watchers out there.
One of the most annoying parts of my job is running into people I call “market crash watchers.” These are folks whose only focus is worrying about whether the market will crash again.
Their questions always start with something like “Do you think we’ll have another crash?”
I’m here to tell you to stop worrying. In the table below is a list of crashes going back to 1623. And guess what? We’re still here, and for the properly prepared, those crashes never mattered and still don’t.
The Bengal Bubble, the tulip mania bubble, panic after panic, crash after crash – and the only thing we know for certain is that they happen all the time. They all bottomed, turned around and ran up to new highs.
Black Monday, the dot-com bubble, 2008 and 2009… All of them seemed catastrophic at the time but are now just blips in the market’s history.
Remember, that list of crashes and panics doesn’t include the day-to-day brief sell-offs. That list would be endless.
And the amazing part of crash watchers isn’t just that they are always compete neophytes who don’t have a clue what they’re talking about. It’s also that they can see only the down periods, never the recoveries.
So which side of the equation do you think makes more money: the drops or the run-ups?
Obviously the run-ups.
Despite the fact that sell-offs present the greatest buying opportunities, we worry about the next sell-off as if we can somehow prevent it or guess when to jump in or out. We can’t!
Instead of expecting a sell-off – which is the only guarantee I know of in the markets – and having a plan to take advantage of it, we flail about, checking our account values daily (or even hourly in many cases) as if that too will prevent what we know is inevitable.
And guess what… All of the flailing about, the worrying and the crash watching does nothing to make money. It does the exact opposite.
After 34 years in the markets, I can tell you with absolute certainty that we will have another crash. It will be another buying opportunity, not the end of the world.
I actually have a stock wish list I build during big run-ups like we have now. I pray for a sell-off so I can buy the stocks on my list at lower prices and higher dividends.
Accepting the inevitable and wish lists work. Crash watching and worrying do not.
Turn off your TV and spend the time getting a thorough understanding of the market’s history. I guarantee that will make money for you.