I’ve read countless advices (in fact I’ve written some myself) that tells us not to panic and when the market comes down. The articles usually discusses the benefits of actually buying more when it’s down, telling us that we should think of it as something going on sale. Although these are great advices, it’s quite hard to follow!
How can anyone know that the market is not going to go down further for the next few weeks? Do you buy when the Dow went from 14,000.41 to 13,378.87 on July 25? Surely that’s not panicking but those that bought on the 25th would have lost more money since it went down all the way to 12,845.78 on Aug 16.
Do you buy at this point? Who can say for sure that the Dow wasn’t going to go down to 12,000 or even 11,000? I’m sure some of you will think that it wasn’t going down that far because the Fed did this and did that. I can only say that many of us aren’t as smart as those people. If it was that easy, there would be no personal finance sites because everyone will be able to make unlimited amounts of money in the stock market. Then again, the stock market wouldn’t work properly since every share bought equates to every share sold so if no one can buy anything if no one sells.
Instead of trying to time the market, many of us should really just buy into low cost index fund regularly. Start ignoring all the advices and news that tells us the world markets are all crashing down, and stop listening to everyone saying the market is soaring to new highs. Just keep investing, putting more money into the market at regularly intervals and start having fun because we will end up richer and happier.
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{ 3 comments… read them below or add one }
Good advice. I should follow that since I end up second guessing myself all the time and worrying about everything!
quite right. Ben Stein said that he doesn’t know what will happen next week, but he’s sure that the market will be much higher in 10 years!
Adventures: He’s quite right! Keep investing!