Why do so few people invest in the stock market? If I had to sum it up in one word it would be routine or change. While my invest is in helping you invest in the stock market, my main focus is to get you to invest in yourself. Buy low, sell high, is probably the single phrase that prevents us from investing in the stock market. Therefore, I will continue to discuss this concept.
We can change our routine and habits. Changing our habits is not the same as changing a answer on a test. We cannot erase our answer and choose another. This is a five second process. Changing our habits takes at least three weeks. For some changes it takes six months. Imagine weight loss, exercising, or learning a language. We make tremendous process the first month, but then plateau. When this happens, we often revert back to our old routines or habits. We should start our countdown after the plateau.
If we view investing as overall, then our worst enemy is the naysayers. If we view investing from the aspect of investing in the stock market, then the news media is our worst enemy.
Peter Lynch said that the stomach is the key organ when it comes to investing in the stock market. You know it is true. You have experienced it when you sat for a test, when you were about to give a speech, and in many other situations. Logically you know all is well or the outcome is not the end. However, your stomach is not your worst enemy.
Just think about the simple phrase – buy low, sell high. What are you thinking? I believe that you are you thinking it is obvious. So, what is the problem? It is not your brain or your stomach. The naysayers may plant a seed of doubt, and that doubt may grow if you are in the stock market, but why? Are the naysayers, or your family or friends, educated enough to discuss investing in the stock market?
The people I help have concerns of losing their money in the stock market. Upon asking them why, they respond that the news media is saying certain things. Do I calm their fears when I tell them not to worry? I only calm their fears when I ask them of their goal and then we discuss their options. In other words, reminding them of their desire to be financially independent is not enough. Telling them what I did helps. A combination of both of these to include showing them the outcome, ultimately calms their stomach.
The news media including whatever you call the opinion-based broadcasts on news affiliated channels, only provides history or opinions. They do not teach. I would not mind listening to their opinions if they would educate. If we view the news as current events, they still do not educate or provide a way forward.
Let’s look at one example. There are some stocks that are in correction territory, down at least 10% from their highs. This instills fear. Moreover, writing an article about how people are not buying the dips exacerbates the situations. Apple happens to be one of the stocks that is off 10% or more from its highs. The news media has already mentioned people are not buying the dips, but they are also writing about a pending crash.
I use Apple because I started discussing Apple with a friend three years ago. This year alone Apple has been in correction territory twice. Extending this range to two years brings the correction territory count to at least four. Because this is current, the news media may state that for the year, Apple is flat, but do they mention how it has almost double since January 2020? Do they mention how it has almost tripled in two years? Yes, it has almost tripled since I mentioned it to my friend, three years ago.
This means there have been two flat periods and several correction-classification drops. This should provide hope. No, I did not say remove fear. Past performance does not guarantee future performance, but a flat year is equivalent to putting your money in a bank or under your mattress. The difference in this case that extending the period to two years or more generates much more money than a bank.
I based this on one stock. A company that everyone around the world knows. Smartphone is still used, but you hear Apple as much.
Taking buy low, sell high a step further by relating it to a mutual fund or index fund, your correction territory times is probably less. Unfortunately, you hear or read about Apple and similar stocks and panic, irritating the stomach, into thinking mutual funds and index funds are in the same category. Note, I am not a proponent of index funds, in that there is not much difference between them and mutual funds.
In summary, a buy and hold strategy can reduce the stomach from getting the best of you, and is a better philosophy than the elusive or problematic concept of buy low, sell high. If you care to continue having your stomach act up, then continue to listen to the news. My suggestion is to believe in yourself, to invest in yourself.
I know you can invest successfully and become better off financially, now you need to believe.
Financial Education with Louis 