Jose Guerena
Mexico
9m
All of us invest in the stock market because we want to earn a positive return on our invested capital, and that's how the stock market behaves most of the time, especially when viewed over a long-term horizon. This can be clearly observed if we look at a graph of any of the main stock market indices over a very long-term horizon. However, by studying history or the mentioned graphs, we can realize that from time to time, market downturns occur, some small and others as large as the one we had during the 2008 crisis or during the coronavirus in 2020. The problem with these downturns is that we don't know when they will occur, or how deep they will be, and while they are happening—as is the case now—we don't know when they will end either. What we do know is that, during each one of them, the markets recovered and reached new all-time highs. Here we are now; will the market keep falling, or will it start to recover? In the short term, I don't know; in the long term, it is most likely to recover and reach new all-time highs at some point. And what do we do about it? Nothing particular—keep investing with the same strategy we've been using all along, because what we don't want to happen is to pull out during a downturn and miss out on the recovery. During times of downturn, it's when we most need to stay calm and not overreact.
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