Surviving the Stock Market: Stay Ahead Of Your Emotions

All stocks have to be owned by someone. Investors essentially have long-term ownership in the world’s businesses. Like any owners, they get paid last. But often, especially if they globally diversify their portfolio, they also get paid most. And, like any owners, they are often the first ones affected by revenue changes, which can be scary.  Managing human emotions are the major driving force behind investor success.


In such times, it is helpful to remember that equities outperform cash and bonds in the long run. Traditionally, stocks earn 2–3 times the return as cash and bonds after inflation, and cash and bonds actually can suffer 50% or greater inflation adjusted losses in decades-long bear markets.


Those who want the rewards when stocks are going up must be the ones to own them when they’re going down. J.P. Morgan is often attributed with the aphorism, “A bear market is a period of time during which stocks are returned to their rightful owners.” Who are the rightful owners? They are the investors who can withstand short-term uncertainties that others fearfully avoid.

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