4 Reasons NOT to be Scared of the Stock Market
The stock market seems scary. Especially if you’re a woman who was socialized to think you weren’t supposed to be thinking too much about money or how it works. But a huge secret that most people who are making significant amounts of money know about is the stock market secret. If you want your money to grow *over time* while you basically just live your life, expose your money to the dang stock market.
If you’re still feeling scared, I hear you, and I get it (also, check out my previous post “You Know What’s Scarier Than Investing in the Stock Market?”). It wasn’t until very recently that I even took the time to try and understand it (Math? Numbers? Graphs? White guys in suits yelling about math and numbers and graphs? Eh).
If I haven’t convinced you that the stock market isn’t that scary, hear me out. You don’t have to be Warren Buffet to be a good investor. You don’t have to be an expert. You don’t have to have a degree in finance. You don’t have to be super wealthy to get in the “game” (also, stop viewing it as a game).
Why are we scared of the stock market?
We’re scared because a) we don’t feel like it’s for us b) we don’t feel educated enough to get involved and c) we don’t want to lose money.
But making decisions from a place of fear is never really a good thing (thank you, therapy). This fear can cause us to make emotional decisions with our money (believe it or not, NOT investing is often an emotional decision). Instead of letting our fear guide us (and honestly, hurt us), let’s use logic to understand why the stock market is not scary.
Most of what I share below are facts I learned from listening to Tony Robbins’ podcast “Unshakeable”. These are adapted from his two episodes on “freedom facts”.
1. Stock market corrections are NORMAL. A correction means the market drops between 10 and 20 percent. On average, corrections happen once a year. That means if you’re 25 years old, you could expect to see 75 more market corrections over the course of your lifetime. These are routine, impermanent, and not something to be scared of. The average market correction lasts around two months and then they’re over. If your money is in the market during a correction, the worst thing you could do is take it out because you’re scared. Wait out the storm; historical trends show us that it always passes.
2. Literally nobody can predict when the stock market will rise and fall. The media gives us this myth that if we just work really hard and spend a ton of time analyzing and noticing trends, we’ll have intel into what stocks will rise and fall over time. I’m new here, but to me it just seems like people trying to tell you they can predict these things just want to sell you something. Jack Bogel, founder of Vanguard (an investment management company with over 3 trillion dollars in assets), says in his 65 years in the business, he’s never met anybody who can actually time the market.
3. Here’s what we CAN predict using a little logic and historical evidence: the stock market continues to rise *over time* despite short term setbacks. In the past 36 years, the U.S. market ended the year with a positive return 27 of those years (75% of the time). The long term movement of the stock market trends upwards even when short term trends seem bleak.
4. Bare markets happen every 3–5 years on average AKA they’re semi-normal and to be expected. A bare market is when the market has a drop of 20% or more. In the 70 years since 1946, there have been 14 bare markets which averages out to one every 5 or so years. Instead of freaking out when the market drops this way, just stand still: over time, trends show that it will get back on track and continue to trend upwards. Not only are these tumultuous times not scary, but they are actually great investment opportunities because everything is basically on sale.
Disclaimer* I am NOT a financial advisor, I have no formal training in this space, and I am not authorized to give advice on how to manage your finances. I am literally a woman who realized she didn’t have her financial sh*t together, who felt systemically kept in the dark about money, and who is trying to learn as best she can how to get out of the dark.
TLDR;
The stock market isn’t scary because:
1) Corrections (when the market drops between 10–20%) are normal and historically happen ~ once a year. Then the market goes back up.
2) NOBODY can predict the stock market. You don’t have to “make smart picks”. You just have to get in and stay in.
3) The stock market continues to rise OVER TIME despite short term setbacks.
4) Bare markets (where the market drops 20% or more) happen ~ 5 years historically. Trends still overall go upwards.
