It’s Not Easy Being A Long-Term Investor

“The key to making money in stocks is not to get scared out of them.” –Peter Lynch

05-09-2022

Take a look at the chart below and you can see that the trend in the stock market has been historically up. In fact, the S&P 500 has averaged 9.8% per year since 1928. To get that long-term average the markets have been up, down, sideways and everything in between. On average, the markets go up 3 out of every 4 years.
s-and-p-500
Many people think that the stock market is controlled by the Fed…or what interest rates are…. or what inflation is doing…. or a myriad of other ideas. But why does the stock market go up over the long-term?
 
The real reason is because the economy grows and companies make more money. When you own stocks, you own a piece of that growth and innovation. As an investor, you share in the profits and cash flows of the companies you own. 
 
Unfortunately, the reason the markets go up over time is also the reason they have to go down in the short-term. You won’t get these juicy long-term returns if you don’t subject yourself to the volatility of the market. That’s just the reality of it. No way around it.
 
It’s not easy being a long-term investor in the markets but this is precisely why the stock market goes up over the long-term.