Date: 2020-07-10 22:30:03
Lets discuss the biggest mistakes investors are making right now in the stock market, whether or not this is similar to 1929, and then what you can do about it to come out ahead – Enjoy! Add me on Instagram: GPStephan
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First: The stock market is poised for a 40% drop, warns economist who says the current climate feels a lot like 1929.”
Even though we can line up charts from 1929 to today and say “Look how similar they are” – the reality is that past performance doesn’t indicate future results, we have a Federal Reserve stepping in, in ways that we didn’t have in 1929 – and we have a much more robust safety net in the event of such massive failures. Sure, we’re printing more money than we know what to do with – but, that should hopefully keep prices high, all things considered.
For ANYONE who wants to be a successful investor LONG TERM, it’s important to understand JUST how BAD market timing is, and how much this would cost you if you were WRONG IN 2020:
Despite the markets OVERALL being flat for this year…if you missed out on just the TOP 5 trading days throughout the entire year…you would be DOWN 30 PERCENT.
Evidently, this is SO COMMON that Citiground found that more than 2/3rds of investors were MORE LIKELY to see a 20% LOSS from their investment than a 20% GAIN…that’s because, typically the mentality of most investors is: Prices are down, I better sell – and then when they drop EVEN FURTHER, I’ll buy back in.
But, this type of game is more like a casino than an investment strategy…because typically, some of the BEST days in the stock market happen after the WORST Days…and if you aren’t in the markets during the worst of times, you won’t be in it for the best.
According to JP Morgan, over the last 20 years – if you just kept your money invested, you would average a 5.62% return. If you miss JUST the best 10 trading days…over 20 years…your return drops to 2.01%. If you miss the top 20 best days…now you’ve LOST money from a 20 year investment…so, literally over 20 years, just missing the best 20 days mean you LOSE MONEY. And from there, it gets even worse.
The moral of the story is just this: when you invest, as long as you’re diversified and holding within a good company – the best thing you could do is just DO NOTHING. Keep holding. Stay invested. If the market drops, there’s your chance to buy more – but don’t change your investing strategy around someone who says the market is going to drop 40% like 1929, and keeps repeating that every year until maybe one day he’s right.
In addition to that, though…we also have another topic that everyone wants me to talk about, and I haven’t really addressed it until now…and that would be GOLD. What brings this to our attention is that Gold is now trading above $1800 an ounce, which is the highest level it’s been since 2011…
Personally, I’m just not a huge fan of investing in gold. I think it definitely CAN have a place in your portfolio, but it’s certainly not an investment – just like I wouldn’t call a savings account “an investment.” I think it can work, in certain situations, but buying gold isn’t the “end goal” – it doesn’t produce anything, it doesn’t provide a dividend, and transaction costs are so high…I just don’t recommend keeping much money in Gold, and I keep pretty much nothing in precious metals besides some old coins and a watch.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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