(Read in 4 minutes) Investing isn’t about chasing the latest winner. It’s about surviving the storms — those inevitable periods when markets turn against you, often for much longer than anyone expects. Survival in investing isn’t built on bold predictions but on one timeless principle: Diversification.
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Stocks move on future news:
The market is an information processing machine, and there is a lot of information to process. Journalists will tell you why and what it is, which may or may not be related. Think of the market as a random walk. It’s randomly moving around, digesting the news, and over time, earnings grow, and then the stocks go up, but nobody knows in advance which stocks will be the winners. And in reality, the returns of the market overall are the handful of stocks that have exceptional gains and have been basically the winners in the market.
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Investing can be stressful, however with financial science as a “north star” it becomes sustainable and palatable provided that one is optimistic and believes that on average, progress is made (albeit slowly at times).
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Inflation is on everyone’s mind. Unfortunately, we do not know when inflation will peak — so all we can do is prepare.
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Compared to the world of 30 years ago, the road to investing is filled with distractions. Advances in technology have made it possible to be active 24 hours a day, amplifying what’s called a fear of missing out (FOMO) in our lives.
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