THE WORLD'S UNLUCKIEST INVESTOR:
SOME INVESTORS live constantly in fear of a market crash. I believe the best way to address such a fear is to try to evaluate "what's the worst that can happen". While past performance is no quarantee of future results, let's take a look at how this has really turned out for the last 50 years.
How bad would be the returns of someone who invested in the market in lump-sums at the worst possible time -the exact market peaks, with consistency, for five entire decades?
What would have been the results for the unluckiest investor who always finds herself missing market bottoms and putting all her savings into the market in one lump sum right at market tops?
According to Standards and Poors data, over the past 50 years, the S&P 500 benchmark went through:
26 market corrections (declines of 10% or more, see below).
6 bear markets (declines of 20% or more, highlighted in red).
Among them, 3 market drawdowns of more than 40%.
Economy Insights has run the numbers and the results for the "worst investor ever" are surprisingly good:
7.4% annualized!
The worlds worst investor still made over 8 times her money.
The key takeaway here is that only one behavior was key to achieving these bank-beating returns over the last half century. Staying Involved with the Market over time, and continuing to invest!
In addition, what worked is:
Saving More
Avoiding Worrying
Start Investing Early if at all possible
(the next best time to get started is now)
Stay Positive
(the economy has survived much worse headlines than you're reading today)
Buy incrementally rather than lump sum.
(an automatic monthly investing plan already achieves this)
At MAENDEL WEALTH we use several investment management approaches that aim to improve meaningfully over the "unluckiest investor" strategy, using techniques and valuation methods that have shown to have significance historically.
While we are not "market timers" as traders use the phrase, we also believe that the market is often far from "efficient" and that pockets of outsized value appear from time to time which can be used to advantage for a vigilant investor.
If you would value a review of your investing strategy and an analysis of whether your investing behavior has been contributing or destracting from your wealth building, just reach out to our team at www.maendelwealth.com. We have helped many people with similar goals, aspirations and challenges to achieve their dreams.
(*While past performance is not indicative of future results, its worth considering. Nothing here is to be construed as individual investment advice. Always consult your trusted financial advisor)