Those who have money in the market

For investors who have money in the market, these are trying days indeed. The S&P 500 has dropped 20% and although we have a well diversified portfolio the question that comes to mind is what do we do? The answer is nothing! The getting rich simply philosophy is one that has a long term vision and has patience. What does this really mean.

Long term view

Over a span of maybe 40 years, this 20% will be merely a hiccup in the ascent of the markets. Think about it. In 20 years, will you remember this 20% pullback or will it simply be a distant thought.https://gettingrichsimply.com/wp-admin/post.php?post=42&action=edit

The markets are all about advances and retreats. Let’s use history as an indicator. There are many, many more advances than declines. tnThis period in time is no different. Do not try and time the market. It is nothing but a fool’s errand. It is time in the market that creates wealth, not timing the market. The real issue here is to have the discipline to stay in the market and avoid the noise. The markets will suffer volatility.https://gettingrichsimply.com/wp-admin/post.php?post=79&action=edit. That is the nature of the beast. 

By selling now, you’ll create a loss and secondly when will you get back in the market? This is where people fail because no one knows when the market will bounce back. As a result, they leave good profits on the table because they missed the turnarounds.

Pullbacks and What to do

Pullbacks and corrections are healthy. Look at the following diagram.

These are the pullbacks since 2008. If you pulled out of the market at any one of these points, how would you know how to get back in the market? The anwer is to stay in the market and ride out theses dips. Remember, pullbacks are healthy. They allow those who are on the sidelines to get in. They allow investors already into invest more money in the market at a lower price.

Length of Bull and Bear Markets

I love this chart. The reason is that as a long term investor, you have an excellent idea of what could happen. By this chart, we see the time of bull markets and also the length of bear markets. As well as their descents and their ascents. It is by no means foolproof. However, it can tell us what to expect and, therefore help us to make a plan.

What to do

The first thing to do is stay calm and most importantly stay laser-focused. Don’t be distracted by the noise such the media and the naysayers. If the market drops, there will be lots of noise. So expect it, deal with it and hopefully profit from it. As mentioned in other posts, plan https://gettingrichsimply.com/wp-admin/post.php?post=27&action=edit . Plan on not getting out of the market but adding to your portfolio as the market pullsback or becomes a bear market. It is times likes these that the rich get richer. As Warren Buffett is known as saying ¨When everyone is fearful be greedy and when everyone is greedy be fearful¨.

As always, leave me a comment or a market topic.

Rich Simply