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This from one of a recent online headline:
Bad news, in general, sells more than good.
Unless you’re a short seller, the stock market dropping is generally considered bad news.
The market is often a predictor of investor sentiment and the economy to come.
Of the various types of investments — stocks, bonds, or cash (I omit certain other modalities, such as real estate, precious metals, and cryptocurrency) — the best historically has been stocks/equities. Over decades. Study after study has shown this.
Looking in the rearview mirror, things do not necessarily appear smaller than they are in reality. Rather, they are usually seen with greater clarity.
Warren Buffett, arguably one of our greatest contemporary investors, advised this, in event of a windfall: put 90% into an index fund that tracks US markets, such as the S&P 500.
He does not even recommend his own stock (Berkshire Hathaway), which he easily could have. That stock has, incidentally, underperformed the S&P 500 the last couple years.
Volatility is often considered by some to be the downside of an investment, how much it can drop. A curious thing is some investors (perhaps the same) often don’t seem to consider potential upside as volatility.
But one thing we learned in college physics, if not from life: that which goes up must come down.
