Personal investing is influenced by how you think, writes Peter Watson.
Are you pessimistic or optimistic?
If you are pessimistic about the future, you likely would not want to invest in the stock market. As we all know the stock market has no guarantee of future results. Some years you lose.
The recent pandemic provides a good lesson on investing. Two years ago this March, the stock market, as measured by the S&P 500, was down 20 per cent.
Those were scary times. Not only were stocks losing value, but the world as we knew it was in a serious decline.
For investors there were two options. Be pessimistic and focus on the tragedy or be optimistic in human resilience to fight the pandemic and resume prosperity.
After the March decline, the S&P 500 gained 56 per cent during the next year. Investors that looked ahead optimistically and continued to hold their stock portfolio were rewarded.
Over the last century the S&P 500 has posted yearly gains about 75% of the time.
Everyone’s circumstances must be considered before developing an investment strategy.
If you have a long-term horizon, consider investing in a well-diversified low-cost stock portfolio. Except there will be periods where you will lose.
Also, except the reality of human ingenuity to overcome obstacles. If the past 100 years can be used as a guide, the result will be continued economic prosperity.
Those who own stocks have the opportunity to share in that prosperity.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Peter Watson provides wealth management services through Watson Investments – www.watsoninvestments.com
