The US stock market has turned $1 into $748k over the last 130 years.
It’s amazing. The greatest wealth-generation machine of all time.
That’s an impractical time frame, but let me show the context of why this matters. Here’s what actually happened during those 130 years of amazing returns:
This is so important. During a period when market returns were extraordinary, it’s common, normal, constant, that stocks are way below their previous all-time high.
Big returns amid constant chaos and volatility is the entire history of the stock market.
But still…
… these declines hurt. They’re never fun.
Two things to keep in mind:
Your lifetime investing returns are overwhelmingly determined by how you behave when the market gets wild, like it is now. Napoleon’s definition of a military genius was “the man who can do the average thing when everyone else around him is losing his mind.”
If you can remain calm and not dump everything in a panic when the market plunges, you don’t need to make many smart decisions to do well at investing over time.
And remember the ultimate market irony: All past market declines look like opportunities, all future market declines look like risks.