The Stock Market Is Going To Go Down

We all love predictions. We want to know the future and be prepared. We can't help ourselves. Every time someone stands with confidence and declares, "This is what is going to happen!" We are drawn in a little bit. There is a piece of us that wonders, "What if they're right? Should I act on this?"

As of this writing, the stock market is experiencing new all-time highs every other week. It has literally never been more valuable in its entire history. I bet it doesn't feel like that though. My guess is the economy feels out of whack, inflation is ruining everything, and nothing you do matters!

It's the beautiful irony of living in "such uncertain times as these." As if to suggest there are times that are more certain than others. When it FEELS uncertain, we search for certainty. I don't know what to do, I just want someone who knows to tell me what to do. 

News organizations know this and are happy to cater to it.

"Random guy who predicted the 2008 crash thinks bad things are going to happen again!"

"Economic experts believe the world is going to implode."

"Man who wrote a book about the lessons he learned from his friend’s dad, who has predicted stock market crashes 5 times before and has been wrong every single time is pretty sure THIS time it's REALLY going to happen."

And we click. We watch the video. We wonder if we should just get out before it gets really bad because we don't want to lose it all. It's probably the same reason you're reading this right now.

The reality is, no one knows what's going to happen. Not one. Remember the famous people who correctly guessed previous stock market problems? They have been wrong more than they have been right. Ever have a friend say, "I had a feeling I should have sold but didn't have the guts to make a change." They had no idea.

In October 2022, Bloomberg Economics said there was a 100% probability of a recession happening within 12 months. 100%. I'm not talking about your conspiracy theory relative, I'm talking about the highest educated, credentialed, experienced experts crunching all the numbers looking at all the data, and leaving not even a 1% chance that they could be wrong. 

Not only was there not a recession, but things went well. Even the S&P 500 was up 24% in 2023.

This can't be overstated. It's not like they kinda missed the mark or even that things were stagnant for a little while. It was the complete opposite of what they and most of the other experts thought was going to happen. But your gut is telling you this time is different? Good luck with that!

It's a tiring process. But what can we do? I've got an answer, but you might not like it.

Stop trying to guess.

Give up trying to "time the market."

What to do instead? Focus on owning great businesses and holding them for a long, long time. This is what you do when you invest in the stock market. It's not a nebulous mix of random numbers that go up and down when they please (though it can feel like that). It's actually a marketplace of successful businesses who want to keep adding value to society and are willing to let you join in their success.

It can be really hard to know exactly which businesses will do the best, which is why I recommended buying a whole bunch of different ones. For the most part, you'll do really well, and you don't risk losing big compared to putting it all on one and being wrong. This is what people mean when they say diversification. "Never make a killing. Never get killed." - Carl Richards (Thanks Nick Murray!)

If you can get involved and keep buying, things usually turn out well for people who have owned great businesses for a long time. If you don't know where to start, let's chat.

So is the stock market going to go down? Yes, it will at some point. But nobody knows when. And that’s okay because we aren’t focused on when things go up and down anymore. We’re focused on the long haul, with the belief that great businesses will help us get there.