Warren Buffet, arguably one of the greatest investors, bought his first stock in 1942 during the thick of World War 2. Then came the Korean War, Polio, the Vietnam War, Smallpox, the Cold War, 9/11, the War on Iraq, 2008, Covid, and so on.
The Forgotten Bull Market
One thing remained true through all of the hardships above – Warren Buffet never sold. All long-term investors need is a belief in America, the ability to ignore the headlines, and the understanding that progress is inevitable. Ten grand invested in 1942 in an index fund and continually reinvested would be worth $51 million today. This is roughly a 509,900% increase or 5,100x gain. Of course, inflation plays a significant role here, but the point still stands.
Is A Meltdown Coming?
21st-century investors have been calling for a meltdown of epic proportions. They cite anomalies like Y2K, a possible WW3, Game Stop Gamma Squeezes, etc. as the catalyst for the inevitable death of the market. Just scrolling through the past week’s major headlines, I saw words such as “nightmare, a market bubble, growing fear, and panic.”
I am not denying the fact that the ramifications of the Reddit vs. Wall Street disaster are serious. Nor do I deny people lost billions of dollars in a fixed market. But my long-term investing outlook remains the same. Losing money is always terrible. But the threat of hundreds of millions dying from Smallpox or the threat of mutually assured destruction is many multiples worse than the GameStop situation. And the world still recovered.
The GameStop frenzy will go down as another market anomaly. It’s no different than when oil prices were negative and buyers couldn’t be found in a market that literally would pay you to buy.
Black Swans In Finance
These “black swan” events will always happen – the important lesson here is for investors to remain adamant. Adamant is defined as: refusing to be persuaded or to change one’s mind. Anyone can do it, regardless of skill, IQ, or status. The most profitable and greatest investors are immovable, unshakeable, and uncompromising, through hell and high water, war or disease. They remain certain there will be better days ahead in the long term and that their investments will continue to grow with time in the market.
Here’s where to start if you are thinking about investing in crypto.