Wednesday Rally Recap

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Wow, what an amazing trading day!  This is another instance of markets hitting record highs and I don’t think that this is the end of the amazing rallies we have seen since election day.  I wanted to touch on a few fears that people have when investing.  One is the fear of losing money, the other is the fear of losing everything.

Fear of Losing Money:  Cure, Investing for the long term

I cant explain this enough but over the long term the stock market always goes up.  I know it is cliche to say that we invest for the long term but we invest for the long term because this allows us to ride the dips, even buy the dips, and then prosper.  investing for the long terms ensures that even if you lose money it wont be for long.  This is because the market moves based on not only trends but inflation.  Inflation puffs up the market in ways that as inflation goes so does the stock market.  In the 1970’s the market was valued at around 2000.  At the height of the most recent market crash the Dow Jones index was valued at around 14000.  Today we are at 19,500.  What does this mean? It means that if you thought you lost it all in 2009 when the market plummeted from 14000 to 7000 you were wrong.  If you held on not only would you have made ALL your money back, you would have made an additional 30%.  The key is to play the game for the long term and keep feeding the fire.

Fear of Losing it All: Cure, knowledge of how stocks work 

Everyone’s fear is that a company will go to zero and for the most part that is not possible. It rarely if ever happens. This is because at the core of the stock price is the price of its assets.  That is the price of common sense items like their real estate, their inventory, computers, land, everything that has a value.  This is important because it means that at the very least, even if a stock crashes you wont be left with nothing.  The book value is the baseline and if you can calculate the baseline you know what your stock should be worth at the very bottom. Investing is not gambling and if you do it right you wont be left empty handed.  Just know that you will never go to zero. 

Hopefully this short blurb inspires you to act and join our club as we continue to fuel the fire and grow toward our billion dollar goal.

Be great, because nothing else pays!

Todd Millionaire

 

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