Does it really just go up?
Well, yes, yes it does.
Could you imagine if the stock market, and therefore the economy, didn’t recover after crashing? It would mean long-term catastrophic collapse which isn’t something governments would allow. It’s not even worth delving into the repercussions of a long-term economic crash. Besides, investing would be the last think you’d probably be thinking about!
To keep it simple and approach this from a logical standpoint, we’ll use a chart of the S&P 500, which is a basket of the 500 top US companies. This basket basically represents the US stock market, so whenever you hear someone say the US economy, they’re usually referring to the top 500 companies.
Despite the occasional, and tragic, events that’ve plagued the world throughout our history, the market always recovers. 📈
Why does it always go up?
The thing is, the world is constantly improving and striving to be a better place, although sometimes it doesn’t feel like it! 🤨
We’re always inventing new technology, pushing boundaries and becoming more efficient. Big brands like Apple, Tesla, Microsoft and Amazon are constantly seeking new ways to innovate, stay ahead of the curve, make life easier for the common person. As a result of this constant innovation, companies make more money over time, which means the economy always go back up.
Whether markets are crashing or not, companies continue to innovate and forge new paths.
And the next time it crashes and there will be a next time, keep your cool and be patient. Investing is a long-term behavior.
You can read more about market crashes and investor psychology in my upcoming investing course.