That is the question: What’s the Stock Market Going to Do? As investors in the stock market, I am sure practically all of you have been asked that question before.
Amongst those who know I invest in the market; I have been asked that question numerous times. From friends, to family, to co-workers, and sometimes random strangers, that question has come up. What is the stock market going to do? Go up? Go down? Is it going to crash? What’s going to happen?
There is only one honesty answer I can give: I don’t know!
Nobody knows. I do not have psychic abilities to see the future. Nor is there anybody alive that does.
If I had the ability to see the future of the stock market, I would quit my job and never have to work again. If I could see market prices ahead of time, I would be the wealthiest person alive. Heck, I would be rich enough to completely buy out Elon Musk and rub dirt in his face. That’s how rich I’d be!
The only thing I can say with certainty is that the stock market has historically performed well over the long-term.
Since 1926, the average annual stock market return has been a little bit over 10%. That is basically the last century. Of course, there are other factors involved such as inflation and taxes to calculate into your own personal returns. However, roughly 10% return per year is the standard benchmark.
That doesn’t guarantee the future will see 10% returns per year, even over the long-term. However, this is historically what has been observed. Many individuals have done well in the long-term.
Most people who ask about what the market is going to do, at least in my experience, are more concerned with the possibility of a stock market crash then the prospects of potential gains and growth. In other words, fear rules the day. Fear of loss.
And it is hard not to see why fear rules. Just about every day, every week, every month, and every year, the news media has a talking head on warning the market will experience a crash really soon. Amongst a financially illiterate populace, this kind of fear-mongering is very effective.
Sure, there have been market crashes in the past as well as market booms. There will be market crashes and booms in the future. But nobody knows when.
The guys you see on television or online who claim to have predicted market crashes before are often the same guys who predict market crashes every month. They have been wrong hundreds of times. But every now and then they will get “lucky”. We know, “this time is different”, right?
I could spend the next decade or more predicting each year that a hurricane will hit New York City. Chances are, I will get it right sometime. That doesn’t make me a genius meteorologist.
Even at the start of 2019, of the “experts” who predicted a market crash in 2020, not one mentioned before hand that a global pandemic would be the cause. (And the funny thing is, the stock market rebounded strongly 1 year after, erasing 2020’s losses and reached new heights)
There are bull markets followed by bear markets followed by bull markets followed by bear markets. But nobody can predict when these will start or end.
Again, all that can be said with certainty is that the stock market has historical done well over the long-term with a roughly 10% average return annualized over the century. It doesn’t mean it is going to do well tomorrow, next week, or even next year.
But over long periods of time, the market has done well. You just have to determine your risk tolerance and realize there will be ups and downs along the way.
The other thing I run into a lot, especially from co-workers, is hearing from them they heard about a particular stock that is going to soar high real soon. 99.9% of the time, it usually pans out into nothing but losses.
The problem is two-fold. Firstly, nobody can predict with 100% certainly what an individual stock is going to do (unless you are part a pretty shady and probably illegal deal). Secondly, it is just a get-rich-quick mentality, which we all know how 99% of those turn out for most people – badly.
If you buying a stock in the hopes that it will soar, based on some tip or someone else’s opinion, so you can sell for a profit really quickly – you are likely headed for disappointment. That is gambling, not investing.
I know people who purchase stocks that are supposedly going to soar only to see the price plummet. Then they sell out of fear of greater losses. It is hard earned money lost gambling.
When my coworkers ask me about such stock trades, I tell they that is not what I do. And I can’t predict what the future prices of a stock will be.
I try to explain dividend growth investing to them. However, they see the process as slow and they often look upon dividend payments as too low for them to be meaningful. Basically, they want to get rich quickly. That is a shame, because that is not a feasible financial strategy for success.
I am in my 8th year of actively investing in dividend growth stocks. I have built a six-figure portfolio that generates over $13,000 in dividend income per year. That is over $1000 per month in cash coming into my wallet.
Best of all, that is passive income that I earn while I sleep. I don’t have to put in working hours for that cash. Most people would love to earn an extra $1,000 per month without working. But many are not willing to make the sacrifices or take the time to build up such investments. Most just want to get-rich-quick.
Meanwhile, I will continue to invest, building up my passive income, and work towards my goals. Great things take time to build. Everyone should remember that.
So, to answer the question: what’s the stock market going to do? I don’t know. Nobody does. Just know that the market has performed well over long periods of time and determine your risk tolerance. Happy investing! 🙂
What do you think? Let me know in the comments below!
Also, don’t forget to Subscribe for more great content and updates! 
Like this:
Like Loading...