As you’re busy trying to balance being a nurse practitioner entrepreneur and investing for the future, one of the most damaging shortcuts I often see people taking is to listen to what the so-called experts on social media and the news have to say about what the stock market is going to do next. This is especially something true that you’ll notice when the market is about to slide into a recession. For some reason, these people love to forecast doom and gloom – probably because that gets people to click on their stuff to share or even purchase something from them.
Listen, over my career as a nurse practitioner entrepreneur and an investor, I’ve been through two official recessions. The Great Recession of 2008 is something that in hindsight was bound to happen. However, unless you were one of the guys depicted in the 2015 movie “The Big Short”, then you probably didn’t see it coming in the moment. I wish I had more money to deploy into the market during those times, but I was just beginning my career…
The second was the recent and surprisingly short one in the months that followed the onset of the initial days of the COVID pandemic in 2020. Again, I don’t think anyone could have predicted that a single virus was going to shut down the entire world. And by the time we all had to lock ourselves indoors and limit going to stores, it was already too late and obvious what was going to happen to the economy. If you had bought during the dip like I suggested, you would have make a very healthy return.
Whenever I consider if there’s any validity to what these self-proclaimed financial gurus have to say, I remember this quote that Vanguard founder Jack Bogle wrote in his book “The Little Book of Common Sense Investing” about people who try to make predictions about the stock market:
After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.
In other words, NO ONE can predict the future. Sometimes individuals may make a call and eventually get one right. But to be able to do this consistently is not only futile but IMPOSSIBLE.
While no one can say for certain what the markets will do tomorrow, there are TWO MAJOR LESSONS that I want you to take away from my experience and the experience of other investors:
- The markets will fluctuate. This is why dollar-cost averaging is an investment strategy that works. By systematically buying at regular intervals, you are bound to capture stocks/funds at low prices without even having to think about it. This is what I have been doing over the past year and will continue to do so. I expect very big returns WHEN the market rebounds. That could be 6 months from now or 3 years from now. It shouldn’t matter because having multiple income streams provides financial redundancy.
- The market will go up when measured over a long-time horizon. Look at any graph of the S&P 500 and when you consider 15 years or more, the trend is positive. This is why having a long-term horizon is always the simplest way to win at investing. This is another reason why you need to identify your time horizon for financial independence. It is CRITICALLY important.
My advice: FORGET what the “experts” are saying. Use what works and keep on buying little bits of financial freedom one piece at a time … no matter what direction you think the market is heading. It WILL pay off.