The Long-Term is Not Where Life is Lived

The Long-Term is Not Where Life is Lived

Click the link above to read the full article. The article was published on October 23, 2022.

Another great article from one of our favourite follows Ben Carlson, CFA from A Wealth of Common Sense at Ritholtz Wealth Management.

The article starts by reviewing an old personal finance adage comparing staying physically fit and financially fit.

To stay healthy you have to eat right and exercise regularly. To build wealth you have to spend less than you earn and invest the difference. Both of these endeavors are simple but not easy.

One stat I thought was pretty mind boggling was this one: 

Diet researchers estimate that on average we’re forced to make more than 200 food-related decisions each day.

In the author Ben's opinion he thinks that staying physically fit is more difficult then staying financially fit.

You have to try each day to be healthy. Wealth mostly happens from making some good decisions up front and staying out of your own way.

The most important point of his article we believe is the one below. The mindset that bear (down) markets put most investors in tends to be a trick (Happy Halloween!).

This is why it’s so important to remain dedicated to a long-term mindset during a bear market. Bear markets tempt you into thinking the days are more important than the years. Bear markets want you to act like a fad diet and force you into an unforced error. Bear markets want you to pay attention to the day-to-day movements in the market. How do they do this? By exhibiting more volatility — to both the upside and the downside — on a daily basis. This month alone, the S&P 500 has seen 60% of all trading days with daily gains or losses in excess of 1%. This is what happens during downturns — volatility clusters because investors panic sell and panic buy when they start losing money.

You have to survive many short-terms to get to the long-term.

The article linked and mentioned above was published on October 23, 2022 and written by Ben Carlson. Check out more great articles and insights from Ben at his blog A Wealth of Common Sense.