If you want to get excess returns in the market, expect volatility and price fluctuations. You cannot have one without the other.
The alternative is to buy a Treasury Bill or a money market fund; but if you want a higher rate of return, you have to be willing to accept more risk. Bull and Bear markets will cycle; and while it’s never comfortable when the market drops, just remember that the market is priced to provide investors with a return each and every day. Continue reading
“I have found that the importance of having an investment philosophy—one that is robust and that you can stick with— cannot be overstated.”
—David Booth
The US stock market has delivered an average annual return of around 10% since 1926 (1). But short-term results may vary, and in any given period stock returns can be positive, negative, or flat. When setting expectations, it’s helpful to see the range of outcomes experienced by investors historically. For example, how often have the stock market’s annual returns actually aligned with its long-term average? Continue reading
It’s all a matter of perspective. Most people wait for a “good reason” to get into the stock market. They want a shortcut — or better yet, a crystal ball. The truth is that there’s always a good reason to invest now, because everyday stocks have an expected rate of return. With this mindset, you’re always in. You just have to stay in at all times, and you will get the returns.
We live in a society of immediacy. We’ve become used to services that give us immediate gratification. If you want to be a successful investor, one of the most important attributes — after following financial science and academic research — is patience.
If you invest in global and diversified equity portfolios and expect to receive high returns, you have to expect there will be times of disappointment. The average return over time has been around 10% in globally diversified equity portfolios. Continue reading