There are a lot of different philosophies on the subject of if you should stay in the market through the up and down times or not. Some of my friends say they get out when it is high and then buy when it is low. They swear they make a ton of money doing it that way. Yet, I don’t have a crystal ball on when the Stock Market is at around the top and not going any higher. I would have felt bad jumping out of the Stock Market when it was even at 20,000 and then waiting for a crash. I would be missing out on all these dividends and growth we have been receiving.
I have been to classes and heard from many other people that was against trying to time the market and they showed examples of why not to try jumping in and out.
As always, I am not giving you any Financial Advice and you should seek advice from your Professional Advisors to see what is best for your situation. See my Disclaimer at MillsWay.com. This is for entertainment only.
Tony Robbins had some good info in his book called “Unshakeable”. The link to the books summary from Paul Minors is in the below show notes. If first heard him talk about it on his Podcast so I wrote it down as I was walking and then covered it with our boys that night after they got home from school. It is a good example of why to stay in the Stock Market and hold your stocks.
Tony Robbins wrote the following;
‘7 facts about the Stock Market
When a market falls by at least 10% from its peak, it’s called a correction. When a market falls by at least 20% from its peak, it’s called a bear market.
- On average, corrections have occurred about once a year since 1900. The average correction lasts only 54 days – less than two months!
- Less than 20% of all corrections turn into a bear market.
- Nobody can predict consistently whether the market will rise or fall.
- The stock market rises over time, despite many short-term setbacks. The US market had a positive return in 27 of the last 36 years.
- Bear markets occur every 3-5 years. On average, they last about a year.
- When the mood in the market is overwhelmingly bleak super investors like Buffet tend to view it as a positive sign – eventually bear markets become bull markets.
- Stay in the market long enough for compounding to work its magic, and you will end up with a healthy return – even if your timing was hopelessly unlucky.”
He also said “The greatest danger is being OUT of the market”
That means you have to accept that there will be volatility in the stock market and that there are always corrections. In fact, six of the 10 best trading days in 20 years are within two weeks of the worst trading days, he said.
Some of Tony’s Suggestions;
- Invest for the long term,
- Trade less,
- Control the fears that could otherwise derail you during bear markets.”
He also had some amazing examples of what your return on investments if you would have let’s say had $10,000 back in the day and what it would be worth now if you stayed in the market versus trying to time the market or sat on the cash. It proved my theory that Darlene and myself are going to ride the market out through the good times and the bad times.
The mental part of Investing is a challenge and with all the news that hits us constantly from our TV’s, Radio Stations, News Paper to Social Media posts we are smothered by good or bad news on the stock market and opinions.
We teach the boys to hold strong to their beliefs and ride out the stock markets roller coaster. To hold on to their stocks and not to try to time the market. They think it is boring to just hold on to their stocks and not trade them. I hope the older they get they will realize that holding is the way and yes it can be boring to some.
To also have the money they have in Stocks, Real Estate or Businesses. Not to be sitting around not working for them.
Of course, we want them to keep building on their Financial and Investing education each year and work with their Financial Team to make the best choices possible towards their Financial Freedom goals. We want them to learn how to make the best educated choice when picking a stock. They should feel that stock is a solid company and will be around through their retirement years.
The boys are human and the stocks they own go up and down. So often they will say “If I had only sold it before it dropped”. Each time I remind them that they are in for the long run and they have probably at least forty more years till they retire.
With AI technology coming into play who knows what the world of Investing will look like in the next forty years for our kids. I feel AI is the future for sure.
When it comes to the Stock Market, we want them to be diversified though so not one stock or sector can hurt them a lot. Ideally if they never have over 3% of their total Investments in one Stock would be nice.
We know some stocks will not be around in forty years for the boys and some they may need to unload and try to sell before it is worthless. That is where the education on Investing comes into play and they can make that decision in best possible time or with the help of their Financial Planner.
We want them to constantly invest each month into their Investments and not try to time out the market. We want them to set it up with their plan and keep it as simple as possible.
We know there are some reasons that they may need to sell off some stocks. Hopefully they will only have to sell the stocks because of poor performance. But they could have to sell because of;
- Under performing stock. That it keeps going down and not looking to be coming back.
- They have an emergency and need the money to pay for it so they stay out of debt. We do teach them to think of other ways to come up with cash then selling off some of their stocks.
- They hit their Financial Freedom goals and can afford to sell some for something fun they want to do.
But we really hope they don’t ever sell their stocks just because the stock price went down. We want them to stick with their beliefs and stay in the market for the long run. We teach them that when the Stock Market looks really bad and down big time that is a time to try to find even more money to invest in stocks.
We don’t believe in any get rich schemes. We believe in staying in the Stock Market and have many other sources of Passive Income to help the boys reach their Financial Freedom goals. I have faith in our boys that they will achieve Financial Freedom someday.
Here are some positive quotes I like;
“Get your Money to Work for You… As hard as You Work for it.” By Napoleon Hill
“1. Make Money. 2. Use the Money to Make More Money. 3. Repeat the Process.” By Warren Buffett
“There is no way to happiness; happiness is the Path.” By Buddha
“Change Your Thoughts – Change Your Life” by Wayne W. Dyer
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Sources and Resources from Podcast (Available in Show Notes)
1, Tony Robbins Book called “Unshakeable”