The stock market fluctuates in the new year. Omicron amplifies day by day, inflation soars to 7%, and the Fed warns of raising interest rates.
The US stock market closed at 27.9% in 2021, 18.4% in 2020, and 31.5% in 2019 investments. What always accompanies a rising stock market is the prediction that the stock market will crash. The stock market always goes up and down, but it is not unreasonable for stock experts (?) to predict a crash since it has risen steadily for the past 3 years and has risen steadily over the past 12 years. At this news, ordinary investors are also anxious and afraid. I’m at a loss as to whether I should escape (?) from the stock market.
Our life itself cannot be predicted one inch ahead. The stock market is even more so. Investors are constantly trying to know what’s going on around them and how they relate to the stock market. Because they are afraid of losing their investment. Human nature seeks to find certain things, but the future is uncertain, so no matter how hard we try, we cannot find it.
All investments have risks. Economic, political, social and world conditions are constantly changing. It’s like a revolving door in a building. When one risk that affects the stock market goes out, a new one comes in. So, the simplest word for investment risk is “It’s always something.” If you anticipate the risk of something and take action, you will not only damage your valuable assets, but also your body and mind.
See stock market statistics, which can be helpful to the average investor. After the stock market has risen more than 25%, the probability that the market will rise the following year is 82% from 1950 to 71. Eight times in 10 years means that it has risen and then has risen again, with an average annual rate of return of 14%. 71 years of investment can be considered too long. From 1980 to 2020, the stock market rose 9,745% and bonds (10-year government bonds) rose 1,831%. A $10,000 investment in the stock market in 1991 has now grown to $200,000. That’s a 20-fold increase.
John Vogle, the founder of Vanguard, once said, “Time is your friend: Impulse is your enemy” when investing in the stock market. Investors should remember that even after the financial crisis, the stock market fell more than 10% 11 times and experienced a 20% drop twice. However, in the 100-year history of the stock market, there were times when the market fell and crashed, but in the end it all recovered.
Investing in the stock market is always insecure due to various circumstances. However, if you invest with a long-term mind at the risk of a temporary market decline, high returns will come. This is because our human nature is dreaming of a better future than the present and working hard. A whopping 980 companies were newly established last year (2021). This is twice as much as in 2020. For this reason, the stock market as a whole is getting bigger, and only those who invest properly in the market will benefit, not speculation.
No one knows exactly when the stock market crashes and for how long. For this reason, “If you prepare for a stock market crash or invest in predicting it, you lose much more money than you would lose through the stock market crash itself.” (Peter Lynch) investment advice.
Retirement measures and living expenses after retirement are long years, not years. Economist Donald Kaberuka said: “I’m not sure if the glass is half full or half empty. My focus is on how to fill the water cup with water.” Stock market history clearly shows that investing long-term with an optimistic mind is very likely to make your money grow.
Myung-Duk Lee, Ph.D., Registered Investment Adviser (RIA)
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