That’s what it does. And so is the next recovery, and the next correction after that.
So now that we have that out of the way, what is an investor (by which I mean “everyone”) supposed to do?
Have enough cash to pay your bills, plus some more in case something hits the fan. How much? Depends on the “something” and how big a fan you run into. In 2008, the size of the fan was a 50% top-to-bottom drop in stock prices. Not just some of them either, virtually all of them.
Then just when no one could stand it any more (what market pros call “the capitulation phase”) it all turned around and came back. As I type this, it’s still coming back, although of course the market is open for another 20 minutes today.
No one saw the top, and no one saw the bottom, except of course in the rear-view mirror after it happened.
Do you know where you are going to live for the next three years? Do you know how you are going to pay for it?
What happens if you get sick?
What happens if you get so sick or injured you cannot do your job or run your business? Will someone else run it for you? For how long?
What if you died tomorrow? Who would suffer financially if that happened?
What if you lost your mind tomorrow?
Have you answered all those questions? Good. Do you still have money for anything else? Awesome!
Investing is an act of faith in a future that is worth living to see. It is an act of forbearance, of delaying gratification.
It is a conversation between yourself as you exist right now, and the person you hope to be 30-50 years from now, and trying to be fair to each of them.
In this conversation, what the market does today, this month, or this year will not be relevant factors. If they are, then you are having a radically different conversation than the one I am imagining.
It’s hard to be smarter than the world, twice.
That’s what it does. And so is the next recovery, and the next correction...