Anchoring

Every time the stock market declines, it feels like this…

Since 1988, the US Stock Market has traded at an all-time high on about 650 different days (source: Ben Carlson, S&P 500 Index). Sounds great, right?

However, 650 days is only about 6% of all the days since 1988.

So that means about 94% of the time, the stock market has been trading at some level lower than its all-time high.

Which means that 94% of the time we are all thinking “I really wish it would go back up to where it was”.

This is normal. Psychologists call it anchoring.

Why do stock investors elect to be tortured like this about 94% of the time?

So they can seek to retire, stay retired, fund college educations, pass wealth on to their loved ones, start businesses, protect their family, and many other worthwhile reasons. It is the price to be paid in the critically important quest to create and sustain wealth over time.

Author: Rick Wagner

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