Imagine taking on a weight loss effort that is working well for you. It’s pretty easy to follow. The food is tasty enough. You’re not starving. You’re not having to run marathons. It fits into your lifestyle.
Suppose you’re averaging 0.2 pounds lost per day. And then, uh oh, a month after you start, here comes Thanksgiving, Christmas parties, Christmas Day, too many football games and New Years Eve/Day!
Yet during that 30 days before Thanksgiving, at 0.2 per day, you dropped 6 pounds. Let’s say that during the impossible to resist days of heavy holiday food temptation you gained an extra 9 pounds.
Lose 6 lbs right before the holidays, gain 9 lbs during the holidays, you’re losing ground! You might be thinking “Geez! Why bother, I’m still gaining weight!”
The 300 days after the holidays and before the next holiday suppose you can average just 0.1 lbs lost per day with bad days included - that’s 30 lbs.
So now total for the year, you lose 21 lbs despite gaining 9 during the holidays.
It’s very similar to riding the markets up and down and up!
Over time the good market days completely overwhelm the bad market days - in fact the gains are spectacular. But you cannot predict in advance when the bad and good days will occur - so you have to remain invested at all times.
The thing about investing is that there is a ton of news that causes you to lose faith and lose perspective. The “bad” time periods can be multi-years. Then it often turns very quickly. Often people lose their nerve and exit the market right when they should have stayed in.
Stay invested! Stick to proven investing methods! We will help.