We're coming off one of the worst January's the stock market has seen in decades. Which begs to
ask the question, is now the time to buy or is now the time to sell? With most index's down
between 6% to 12%, should you buy the dip? Hoping that you're buying a discounted rate of the index
or should you sell because stocks are going to continue to go down and down?
Hey guys I'm Tim Wolffe, this channel is all about personal finance and helping you learn how to
build wealth. If you are new here please go ahead hit the SUBSCRIBE button and if you get anything
out of this video please hit the thumbs up button, it helps out a lot. First things first is nobody
knows the future. There's always headlines about whether the stocks are going to crash or people
that have predicted shorting the stock market but what you don't see is all the false predictions
that those same exact people have made year after year after year. There's way more false
predictions of whether the stocks are going to go up or down than there are correct predictions.
88% of professional finance fund managers lose to the s p 500 every year. And if you happen to beat
the s p 500 for one year, your odds of making it five years in a row of continuously beating the
s p 500 is less than one percent. And these are fund managers who are paid specifically to try
to predict what the stock market's going to do. So if they can't do it what makes the average
person think they can do it and predict the future because the data all shows that you simply can't.
The number one reason why people lose money in the stock market is because they trade on
emotions. Trading on emotions is when you lose as an average investor. By the time you see headlines
about stocks crashing or stocks rising or bitcoin going up or crashing down it's already too late
for you to jump in and make massive profits or save massive losses. If you're seeing hype on
social media about buying certain stocks and this stock's already been up 50%, it's already too
late for you to buy in and if you're seeing news headlines about stocks crashing it's
probably already too late to sell because the majority of the crash has already happened.
At that point you're trading on emotions, either out of the hype of what you see and you're buying
as much as you can or you're selling as much as you can because of the panic that you're feeling.
During a stock market correction like we are right now where the s&p moved down almost a 10% loss in
January. The people that draw back and trade out of fear are the people that are going to lose the
most. The people that steadily invest throughout are the people that are going to be just fine.
So if you just missed the 10 best days of the s p 500 over the last 10 years that's proven to reduce
your portfolio returns by 48%! Almost half your portfolio just by missing the 10 best days and
if you missed the 20 best days in the last decade that's going to reduce your portfolio gains by 66%
percent! Way more than half and usually the best days in the stock market... as we're seeing right
now, is usually after the worst times in the stock market. So if you see the stock market crashing,
you see all the bad headlines, you start to pull out... know the best days are in the very near
future. We've already seen it this year in January 2022. We've had one of the worst January's but
we've also had some of the best days for the s&p 500 . Gaining two to three percent in just
a single day. Had you pulled back and traded and panic sell and then you miss those days,
those are the days we're talking about that's going to reduce your returns. You haven't actually
lost any money until you sell your stock. It is a roller coaster ride, you have to ride the ups
and the downs and the only people that get hurt on the roller coaster are people that jump off.
Stocks are always crashing, every year the s&p 500 goes through some form of a crash, yet every
year the s p 500 has averaged over a 10 percent return. Since 2010 there has been an average drop
every year of 12.5%! Every single year the s p 500 has averaged a crash of 12.5% and year to date the
s p 500 is only down about 8%. So we're actually doing better this year than on average which means
we can have full belief the s&p 500 can rebound and we can still have a 10% plus year. And if
we're talking about entering into a major crash like the 2008 recession for example, what are
we looking at as far as how fast the s p 500 is going to recover? And how are you going to be able
to time it? In 2008 the s p 500 crashed 57% but it was able to recover in just three and a half years
and then entered into the longest bull market the s p 500 has ever seen. In 2020 the s p 500
crashed due to the Covid 19 pandemic by 34% and it was able to recover from that in three and a half
months and by the end of 2020 the s p 500 was actually up 16%. I'll leave you with this thought
from warren buffett, he said "Be fearful when others are greedy and be greedy when others are
fearful", so yes I'm going to say by the dip and don't panic sell. Thanks for watching guys, if you
got anything out of this video at all please go ahead hit the SUBSCRIBE button and the LIKE button
and you can check out these videos that Youtube's going to recommend for you to watch next.