Getting use to uncertainty

We’ve been here before

One year ago no analyst could have predicted oil would surpass $120 a barrel. Yet here we are.

No one saw oil futures going into negative territory in 2020, yet that happened as well.

In 1979 there was even a call for the end of the stock market, lol.

 

I guess that magazine issue didn’t age very well. One thing is for sure. It’s difficult to predict the future.
But that doesn’t stop people from trying. πŸ˜…

Uncertainty is the only certainty. So we have to learn to live with it.

 

Time horizon matters significantly

Fortunately there are ways to make the unknown easier to deal with.
One way to increase your success rate when navigating the stock market is to extend your time horizon.

Stocks typically are priced for potential events coming up 3 to 12 months into the future.
So if you can leave your investments for a longer period of time you will have better odds than most.

Here’s a chart from Ritholtz showing how likely it is to make a positive return in the market based on holding periods.

 

During turbulent times it’s a good reminder to continue staying the course, and trust your long term plan.

Short term strategies like trading in and out of the markets only work if you know what you’re doing. Otherwise it won’t be much fun. πŸ™‚

 

 

 

______________________________________
Random Useless Fact:

About 50% of people forget to cancel their free trials before they’re charged with auto renewals.

 

Subscribe
Notify of
guest
9 Comments
Inline Feedbacks
View all comments
Financial Samurai
03/07/2022 7:07 am

Isn’t it funny though that Ritholtz is Wall Street though? πŸ™‚

But they’ve done a great job being a online marketing force to gather assets. People in the industry should study them.

Any idea what their returns actually are though?

RICARDO
RICARDO
03/07/2022 7:15 am

Pretty sure that there are a number of your readers, like myself, whose time lines are shorter than the 20/30 year scenario. Don’t want to be pessimistic but the longer we live the shorter amount of time is left.
Uncertainty is impossible to predict, especially when there a people running around whose objective is their own vision of what is right or wrong.
I am wondering where Putin got the idea to criminalize “fake” news??

RICARDO

DivHut
03/07/2022 9:40 am

Investing with longer time horizons definitely puts the odds of success in your favor. One of the benefits of long term investing is the ability to dollar cost average into positions over years and decades. DCA always smooths out the near term highs and lows and certainly lets me sleep better at night as I’m not concerned about short term fluctuations.

Devin
Devin
03/11/2022 11:56 pm

When I see a free trial that requires a credit card, I first check to see if it can be cancelled online or if they make you call.
Then I ask siri to “Remind me in 25 days to cancel X”

THEN I sign up if I REALLY want to try the thing.

Devin
Devin
03/13/2022 1:08 am

Yeah, its not something they’re usually forthcoming about!