Hey yachties, times are tough right now. Like most of you, I’m also in lockdown but hey, at least the wifi onboard is good and we have plenty of food.
If you have any money in the stock market, you’re probably down on your luck. Although, as we know, it’s actually a good thing as it allows the purchase of more stocks at a lower price.
Anyway, despite the stockmarket shitting the bed, don’t worry about it. It’s expected and totally normal.
Always and if it didn’t, the world would be fu*ked. A permanent stockmarket crash would severely hamstring the entire world and most likely send us into chaos & crisis.
What’s even more interesting is the fact the stockmarket has risen despite negative economic news we’re constantly bombarded with.
Part 1: Self-cleansing
Index funds take care of themselves. Put simply, underperforming companies are drop kicked out the fund and are replaced by new upcoming companies.
Naturally, each stock (company) must meet a stringent set of criteria which holds them to the highest standard. This is excellent for us investors as it means index funds are constantly seeking the best stocks out there.
Best companies = more money for us.
You’ll notice in the above charts, it always goes back up. Yes, the path will be volatile and wonky but it will go back up.
Part 2: It works for us
The stock market is a living and breathing beast. Granted, index funds are controlled mostly by fancy computer algorithms and robots but there’s more to it.
When you invest in something like the S&P500, you’re investing in a tiny piece of the 500 largest companies in the U.S. This means you technically own a slice of all these businesses. Facebook, Microsoft, Amazon, Tesla, Apple, Paypal, Starbucks, etc.
Subsequently, the employees within these firms are working for you as well. I know that sounds weird, but it’s true.
We live in a world in which capitalism, selling, ballin’, hustling and making cash money bitches is rewarded. In fact, the very companies within the S&P500 support & follow this concept, as do basically all companies everywhere.
And so, each employee seeks to create the most wealth for the company which in turn means a better performing stock = stock price rises = more money for it’s investors (you and me).
I hope that makes sense and gets you hyped for investing.
…and the next time it crashes (there will be a next time) keep your cool, don’t lose your shit and sell but instead focus on purchasing more stocks and riding that beautiful high.