"Don't try and time the market, what you need is time IN the market! Just buy and hold."You have no doubt had the
experience of being urged like this by your stockbroker or someone else with a
vested interest in you owning shares. Or it might have simply been a
well-meaning friend. “You can’t pick the bottom, just like you can’t pick the
top. So just buy stocks, and even if they fall in value in the short term they
will always rise to a new high later on."
This sort of advice often goes
along with the “Cash is Trash" mantra. Of course, if it were a realtor urging
you, the “advice" would be quite different.
So, is it true? Do shares always
rise in the long term?
That depends on what you mean by
long term.
Ignoring dividends, if you had
bought the Dow Jones index in 1965/66, do you know how long you would have had
to wait to get your money back? Nearly
seventeen years! That’s right. The Dow first touched 1,000 points
in January 1966 and then fell back. It never got back to 1,000 points until
October 1982.
If you had bought near the top in
1929, do you know how long you would have had to wait for stock prices to get
back to pre-crash levels? Twenty-five
years! Yep, it was 1954 before the Dow put in a new high.
Apparently in the previous
century there was a 43-year
period during which Wall Street failed to reach a new peak.
More recently, in Australia,
if you bought shares before the October 1987 correction, you would have had to
hold them for a whole decade before they reached their pre-crash level again
(apart from one fleeting touch in February 1994).
If you bought the Japanese Nikkei
index before its peak in December 1989, you would still be down 50%, seventeen years later!
Wall Street’s NASDAQ index is still about half what it was
more than 7 years ago.
Does that answer the question?
Yes, shares will always rise in
the long term. But you need to understand what is meant by “long term." Most
who parrot the mantra never give it a thought.
Far better to know where the
stock market is according to the Wave Principle, and to have the socionomic
insight.
If you have not read my book or
my newsletters, then here’s a tip: Investing is simple. Just remember one rule
– buy when prices are low; sell when prices are high.
Where is the stock market right
now? High or low? So what should you be doing? Then why aren’t you? It’s human
nature to do the opposite, isn’t it? Why is that? Why does that leave you in
danger? How can you avoid the mistakes that most investors eventually make?
Don’t you think you need to
understand the socionomic insight and the Wave Principle?
