Why You Need To Stop Worrying And Just Invest In Stocks

Posted On October 25, 2016 11:49 pm

One of the most common things I hear from readers is some form of “right now there are too many uncertainties in the global market, and or world”. Well as history’s greatest investor, Warren Buffett said, “You pay a very high price in the stock market for a cheery consensus.” In other words, the stock market, which historically has risen 70% of years, is always climbing a wall of worry.

Consider this:

Between 1950 and today the S&P 500 (including dividend reinvestment) has risen 11.3% CAGR. Or put another way, $1000 invested on January 1, 1950 would be worth $1,212,640 today. During that time here’s what happened:

Recession of 1953: GDP fell 2.6%

Red Scare
Korean War

Recession of 1958: GDP fell 3.7%

Recession of 1961: GDP fell 1.6%

Rising interest rates
Bay of Pigs
Cuban Missile Crisis
Kennedy Assassinated
Interest rates keep rising
Civil Rights Movement
RFK/MLK Assassinated
North Korea seized a US navy ship
Vietnam War

Recession of 1969: GDP falls 0.6%

OPEC oil embargo, oil prices quadruple
Watergate scandal: Nixon resigns

Recession of 1973: GDP falls 3.2%

Double digit inflation
Fed hikes Interest rates to 22%
Iran Hostage Crisis

Recession of 1980 and double dip 1981: GDP falls 2.2% then another 2.7%

US embassy in Beirut bombed
US bombs Libya in retaliation

1987: Stock market drops 22%…in one day

S&L crisis
Soviet Union collapses
First Iraq War

Recession of 1990: GDP falls 1.4%

Housing slump
World Trade Center bombed
LA riots
Interest rates surge
Oklahoma City Bombing
US Government shutdown
Olympic bombing
Asian currency crisis
Russia defaults
Long-Term Capital Management collapses, Federal Reserve bails out to prevent a global financial collapse

Nasdaq crash and recession: GDP falls just 0.3% but stock market plunged 50%

Afghanistan war
Second Iraq War
London Bombing
Madrid Bombing
Oil prices surge to all time high of $150/barrel

Great Recession/financial crisis: GDP falls 5.1%

European debt crisis
Rise of ISIS
Government shutdown
Slow growth
North Korea gets the bomb
Chinese debt/real estate/stock market bubble
European Refugee crisis
European terrorism
Fed Ends QE
Fed Raises rates for first time in 7 years

And yet, throughout all of this (and some killer flu pandemics, and the cold war to boot) the stock market rose more than 1200 fold. The moral of the story? The world is a scary and uncertain place, BUT unless you think that things are going to be a heck of a lot worse than they were in the past 66 years, just suck it up, dollar cost average, buy great companies, hold, accumulate on dips, and reinvest the dividends.

Do that long enough and you are guaranteed to become wealthy and achieve financial independence. Let fear rule your decisions and you’ll not just underperform the market, but will likely wind up miserable, and poor as well.







About author

Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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