One of these days I’m going to have an “economics week” at Think Daily. But today I wanted to reprint something I read from my friend Evan McGoff who works at a small investment firm called Dock Street Asset Management. They do a great job helping people who have money, grow it.
“Nobody is born knowing anything. As a consequence, each generation tends to learn the same lessons as the prior ones, but under some different circumstances.
Millennials just learned that the stock market doesn’t always go up. It mostly goes up, but that “mostly” smooths over some rather rough stretches.
As the most recent generation to reach adulthood, millennials have been characterized mostly by how they’re different from prior generations. In debt earlier. Marrying later. Allergic to suburbs and in love with city life.
But the pandemic changed a lot of that, and millennials finally started acting the way prior generations did. There’s probably no better example than the rush to buy houses. With crowded cities looking less appealing and mortgage rates at all time lows, millennials bought houses in suburbs in droves. Years worth of demand played out in a few months.
And just as prior generations fell into investment manias, millennials are no longer an exception here either. For several years millennials bought cryptocurrencies, NFTs, meme stocks, speculative tech stocks and call options. 2022 has been a rude awakening for this cohort. “
Those were some of Evans comments. When you look at a chart, a chart of the stock market over twenty years for example, you get a big picture. But when you take any slice of said chart, you can get a whole different one.
The stock market does go up – on average over long periods. Some years are bad and some are amazing. The idea is to buy low and sell high. The most reliable way to do that is to invest in quality companies and don’t look at it for 20 years. Have someone like who is not emotionally attached to your money like you are and who won’t panic and sell low when things go down.
I’ll stop here for now.
This is not investment advice or a solicitation at all. Just context.
The stock market tends to do well over the long term. Virtually no losses for US markets when considering a 10 year time horizon. Could that change -yes – but if your time horizon for the money is long term it is probably the best place to park it.
I thank God that my late father was in it for the long term. Conservative investing is the way to go.