In this video on Market Cycle , famous investor Ray Dalio , beautifully explains the underlying mechanics of an economic machine.
When the market goes down and you have invested in a broad market passive fund, like an Index Fund , never fret about the market crashes . A market crash in turn should make you happy! This means the accumulation of the best stocks, part of the Index Fund ,for cheap.
Warren Buffet ,in one of his share holder meating, gave an analogy of buying burgers . “If the burgers were being given away for cheap, would it be wise , to go and return it ,and wait to buy them costlier ” ?
Always remember ,when you buy a stock, you are buying part of a business of that company. If you feel that the company is a great investment, don’t be bothered about the ups and downs. Don’t lose your sleep trying to track it everyday. The returns should get compounded. But it’s hard to pick a right stock , hence a broadly diversified ,passively managed fund like an Index Fund , is the best choice for any investor.
It can be absolutely gut wrenching, seeing your investment tank. This is what differentiates the gamblers from the investors. We as investors should look for a retirement fund , and not bothered by the short term turmoils of the stock market.
The next 25 years,with the advent of globalisation,the GDP of a developing country like India will double . The best way to be part of this journey , is through Index Funds !
Most other Mutual Funds, on the other hand will disappear in next 10 years or so. They will be and are buried deep down , never mentioned again in the Mutual Fund history books! Stay smart and invest wisely.
Read books that help you understand how big a scam Mutual Fund is !
Do read the articles on Index funds.
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