Between the coronavirus halting many supply chains and countries undercutting Russians oil prices, this is the recipe for a global economic slow down that will take some time to work itself out.
What does this mean? The stock market is on sale. The next 12 months could in fact be the biggest opportunity to grow my wealth over the long term. I can contribute to my investment funds building my portfolio in the hopes of riding the markets future growth, which will happen. Will the growth start next week, next month, next year. I have no idea. But it will grow because business and commerce will go on for as long as humans walk this planet.
Some businesses will die and others will not. Since I’m buying only broad based low cost index funds the self cleansing nature of the the fund will prevent me from owning companies that die. I’ll be globally diversified across large cap, mid cap, and small cap stocks with the click of a button.
This is a boring approach to building wealth which is why it’s going to work. As soon as you begin complicating investments with call options, puts and the like imply complexity. I view day trading as trying to manage the risk of too many uncontrollable factors that will affect your return for better or for worse – but you have no control. You could get lucky or unlucky or a little a both.
My philosophy about investing is I believe the world economy will continue chugging along forever. I believe it will be here in 100 years so I want to own a portion of that business. The global economy will not look like it does today, which is fine. I don’t care since I’m buying an index which helps mitigate my risk. I’m not concerned about what the market is doing in the short term.
Short term performance only matters if I’m planning on living on my portfolio, which I will not for several years. Thus for the next several decades, I’m going to continuously invest in the stock market, whether it’s growing or diving, and I will win over the long term.
I’m also going to ignore the mainstream news and media to always feel well rested 🙂