Investing In Volatile Markets Is Never Easy But We Should Be Optimistic

We have written before about the importance of remaining invested through volatile markets and investments consistently showing positive returns over long periods of time.

We can go back over 100 years showing that despite wars, recessions, pandemics and anything else the world can throw at us, given time investment markets recover. We have all the data showing that after falls in markets the following years returns have more than made up for the falls. However, it doesn’t stop us as investors from worrying in the short term and having a natural thought – ‘what if it’s different this time as has been predicted every time markets have fallen in the past?’ While we don’t want to be too pessimistic and let the seemingly constant bad news in, meaning that we give in to fear and come out of markets before seeing them recover, we also shouldn’t be blindly optimistic and assume everything will be great in the future just because things improved in the past.

This article by Morgan Housel gives a great explanation of what we are talking about and some reasons to be optimistic going forward. It is taken from The Psychology of Money and covers a number of topics in a simple, sensible way exploring the strange ways we often think about money and helping us make better sense of things.

Comment

It is completely understandable that nothing will ever take away uncertainty about the future or stop us all from worrying about it. However, having a comprehensive financial plan in place that takes into account an uncertain future is the best way we know to deal with this.