Tom Nash
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Beware of Useless “Experts” Predicting an Impending Stock Market Crash
🕑 Added 2024-09-22 15:45:12 +0000 UTCIf you recently heard “experts” predicting an impending and inevitable crash, this article will put your mind at ease.
We’ve all been there.
The stock market drops for a few days, and all of a sudden the self appointed YouTube “experts” start making emergency streams screaming about "The End of The Stock Market.”
They make money of your clicks and attention but how do they help you really? Watching these Nostradamus style videos only leave you staring at your investment account wondering if it's time to cash out and buy a bunker in the fucking woods.
But you also know that it’s impossible to time the market, so what are you supposed to do with their “predictions” about the upcoming crash? Hold your balls and fall asleep crying to the sounds of Enya?
No.
Here’s the thing: despite market crashes, global crises, and even wars, the SP 500 only goes up in the long run.
In fact, it is so reliable that it’s almost like a cheat code for building wealth.
Over the past 15 years the SP500 gave investors 700%, and yet most retail traders lost money buying and selling stocks over the same timeframe.
Why is that? And how to make sure you become the small minority of individual investors that actually makes money every year.
Let’s break it down.
Whenever the stock market takes a dive, people panic. It’s natural! Watching your portfolio drop is heartbreaking and extremely uncomfortable.
Mainstream media headlines don’t help either. They make money when people are running around like headless chickens, so they pump the fear and make it feel even worse, gaslighting small individuals in the stock market.
But here’s what those headlines often don’t tell you: the market always recovers!
It might take months or even years, but historically, the market bounces back EVERY time, stronger than ever.
Don’t believe me? Let’s take a quick trip down memory lane.
The stock market has survived the Great Depression, two world wars, the 2008 financial crisis, and a global pandemic.
It’s like the stock market is that one person who always finds a way to turn a bad situation around. Got fired? Started a new company. Got dumped? Became a best-selling author.
The stock market just keeps coming back like the 1970’s Pittsburgh Steelers Defense.
Okay, so we know the market recovers – but how? And why?
Well, let’s talk about the SP 500. It has seen some rough times: the 1987 crash, the dot-com bubble burst in 2000, the 2008 meltdown, and of course, the pandemic plunge in 2020.
Yet, despite all of this, it keeps moving upward.
Check this out: since 1957, the SP 500 has delivered an average annual return of around 10%.
That’s better than most people’s savings accounts, their cousin’s business ideas, or their attempts at day trading.
Why does it keep going up?
Because it’s a representation of the American economy and the US economy is undefeated.
Companies get bigger, smarter, and more efficient, even after tough times. Think about Apple, Microsoft, or Amazon. They’ve had ups and downs, but over the long term, they’re like supercharged rockets blasting off into the stratosphere.
Investors who stay the course have historically come out on top.
Here’s where things start to get really cool. If you’ve ever seen a snowball roll down a hill, you know what happens – it picks up snow, gets bigger, and moves faster.
Well, compounding is like a financial snowball, except instead of snow, it picks up more money. The longer you leave your investments alone, the bigger your snowball gets.
Let’s say you invested $10,000 in the SP 500 fifty years ago. With an average return of 10%, your money would have grown to over $1.1 million today, all thanks to compounding.
That’s enough to buy a very nice house… or a lifetime supply of pizza. (I know. I have done the math about Pizza and I’m not ashamed to admit it.)
The magic of compounding is that your returns earn returns, and those returns earn even more returns.
The longer you keep your money invested, the more compounding works its magic, which is why long-term investors see such impressive gains.
The key is staying invested for the long haul.
But Tom, some self proclaimed global expert on trading told me a crash is coming for the stock market, maybe I should sell and take my money out before it happens?
Look, when a crisis hits, it can feel like the world is ending. But guess what? It’s temporary. They come and go, but growth is permanent.
Take the 2008 financial crisis, for example. It was a nightmare for investors – the stock market dropped more than 50%, and it felt like there was no bottom in sight.
But fast forward a few years, and not only did the market recover, but it went on to hit new all-time highs. In fact, if you had invested during the crash, your portfolio would have doubled within a few years after the recovery.
The same thing happened after the COVID-19 crash in 2020. The market took a nosedive, and people were predicting economic doom. Yet, just a few months later, it rebounded, and the SP 500 hit new records.
Investors who stay invested through the hard times come out ahead.
But it’s deeper than that. It’s not just about holding in bad times, here’s a little secret: market crashes are actually the best time to be an investor.
I know that sounds counterintuitive. But trust me, when the market crashes, it’s basically a giant discount sale on stocks.
Warren Buffett, who’s pretty much the Yoda of the investing world, has this famous quote: “Be fearful when others are greedy and greedy when others are fearful.”
What does that mean?
Well, when everyone is panicking and selling their stocks, smart investors are buying. Why? Because those stocks are now super cheap.
Every major market crash in history has eventually been followed by a recovery – and usually a big one. The key is having the patience (and let’s be honest, the guts) to buy when things look scary.
Sure, there are bumps along the way. Recessions, wars, pandemics, and they’re all like rocks in the road. But the machine keeps moving, because people don’t stop inventing new shit, starting businesses, or finding ways to make life better.
Just look at Apple. It started in a garage, survived multiple market crashes, and is now worth trillions of dollars. That’s the power of innovation and economic growth.
And here's another thing to keep in mind: the SP 500 is constantly evolving.
When companies get too big, too old, or too sluggish, they get booted out and replaced by newer, faster-growing companies.
This means the index is always full of the top-performing companies, which is a huge reason why it keeps rising over time.
If you’ve ever thought, “I’ll just wait for the market to drop and then buy back in,” I have some bad news for you: market timing almost never works!!
In fact, trying to time the market is like trying to catch a greased pig at a county fair – it’s slippery, frustrating, and you're probably going to end up looking silly with your face in the mud.
Here’s the problem: nobody knows when the market is going to go up or down. Not even the “experts”.
Sure, they’ll try to guess, but the market is unpredictable. If you try to sell and wait for a dip, you could miss out on some of the best-performing days.
And missing just a few of the market’s best days can absolutely wreck your returns. A study by Fidelity found that if you missed just the 10 best days in the market over a 20-year period, your returns would be cut in half. Yep, you read that right – half!
So, even though the market might dip here and there, it’s almost always better to stay invested than to try and time the market.
Let’s say you pull out of the market during a crash, thinking you’ll jump back in once things calm down. The problem is, by the time things feel “safe” again, the market has likely already bounced back, and you’ve missed the recovery…
If you’ve made it this far, congratulations! You’ve just unlocked the cheat code to wealth: it’s long-term investing.
Over time, the stock market has consistently gone up. And while short term traders might make (or lose) some quick cash, long-term investors are the ones who build real wealth.
Just ask Warren Buffett.
The key is patience. Long-term investors don’t panic during market dips. They don’t try to time the market. They invest steadily, ride out the storms, and let their money grow. And thanks to compounding, the longer they stay invested, the more their money multiplies.
It’s like watching your favorite TV show that just keeps getting better and better with every season.
If you can resist the urge to sell during a crash or try to time the market, you’ll likely come out ahead.
So. Yes, there will be crashes. Yes, there will be global crises and wars. But the market will recover and reach new heights when it’s all said and done.
Long-term investing isn’t flashy, and it might not give you the same adrenaline rush as trading. But it works. And if you stick with it, you’ll be amazed at how much your wealth can grow over time.
Tom
Comments
Generico Fakero
Facts
Generico Fakero
🫡
Tom
"Hold your balls and fall asleep crying to the sounds of Enya?" hahahaha. Great advice as always. Keep Calm and Carry On, brother! One more Buffett gem: "The stock market is designed to transfer money from the active to the patient." (1990)
Ingo Schroeder
Thanks for sharing your steadfast approach to intelligent investing… because its like a fairground out there where everyone is trying their best to grab the attention clicks of unweary investors
EV Bike Dude
Agreed. They will always happen.
Generico Fakero
Market crash predictions are a waste of energy
Generico Fakero
That’s a great way of investing and living
EV Bike Dude
So only listen to the "non-useless" ones like Greg? ;)
AlphaBitMan
My long term strategy has been to always have a cash reserve available for unforeseen living expenses, and to have liquidity to buy dips. Generally don’t sell during dips. If you need to refill your cash reserve, take profits on under performers when they’re moving sideways or when a a particular investment has an obvious change of events, or you have a particular need for liquidity. Choose your own timing. Mass dumping just because the broad market is moving is kind of like jumping off the wrong end of the boomerang. Don’t fall victim to short term jitters. Time in the market is generally your friend, because markets tend to recover all on their own over time. My personal opinion. 🧐
