Unit 1 · Level 1 · Why invest at all
Time beats timing
Studies of the US stock market over recent decades keep finding the same thing: missing just the 10 best days out of thousands roughly halves your long-run return. The catch is that those best days tend to cluster right inside scary crashes, next to the worst days. Jump out to feel safe, and you're very likely out when the rebound fires.
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What you get asked
Why is 'I'll get out now and jump back in when things calm down' so dangerous?
Rebounds strike without warning, often mid-panic. To catch the handful of days that drive long-run returns, you have to be in the market, ugly days included.
The S&P 500 fell roughly 57% from late 2007 to early 2009. What happened to investors who simply stayed put?
Brutal as it was, the US market regained its old high within a few years, and those who kept buying through the dip did even better. The crash punished the sellers, not the sitters.
The market's best days tend to cluster right after its ___ days.
Panic and rebound are neighbours, which is why timing exits and re-entries is so hard, even for professionals.
Match the investor behaviour to its usual result
Notice the pattern: the winning behaviours are boring and automatic, the losing ones are dramatic and emotional.
'Time in the market beats timing the market.' What does that mean in practice?
Nobody rings a bell at tops and bottoms, not even for the pros. Your edge as a long-term investor is patience, not prediction. 🐜
The rest of this unit
Inflation nibbles while compounding snowballs. The case for putting money to work.