This tendency to chase today s latest and greatest can cause them to be tomorrow s biggest loser. Just as investors shouldn t let themselves be led astray of their goals by greed, neither should they let themselves be sidetracked by fear. It takes risk to achieve higher returns. It takes courage to handle risk. The wrong perspective can make things seem scarier than they really are.
Stocks can be volatile over short periods of time.
Yet what goes down, comes up even more over time. Historically, there are only two three-year periods in the last fifty years where stocks generated a negative return and there are no periods over six years where stocks lost money. The average investor s time frame is considerably longer. Again, in the real world, economies continue to grow over time, and the markets ultimately reflect this growth in higher prices. Investors who have the courage to view the performance of their investments in the context of their investment time frame are much more likely to achieve their goals than those investors who are scared off course by the latest wizard s warnings.