Passive Investors are depressed today. Rational Investors are excited.
That’s the difference between living in reality and living in a fantasy world. When you live in a fantasy world, you always have that dark cloud over your head, your worry that reality is going to intrude and send everything crashing down.
I don’t say that to rub it in to my many Passive Investor friends. I say it because I believe that it is only by learning how stock investing works in the real world that any of us can earn and hold onto a successful early retirement. A lot of Passive Investors are hoping today that something in going to happen in the market that will make them feel good again. That’s, well, a passive way to respond to today’s problems. The better way is to take matters into your own hands, invest rationally, and make things better through your own efforts. You don’t have to wait for the market to change. Change yourself. That’s the most effective change possible.
Once you do that, you do indeed see that stocks offer a better long-term value proposition today than they have at any time dating all the way back to 1991. That’s 17 years! That’s exciting stuff for those who are positioned to take advantage of it (and anyone can become so positioned merely by giving up on Passive Investing and coming over to the Rational Investing way of understanding things).
Stocks are great. Today’s valuations are not at all bad. The problem that investors suffer from today is a problem that resides within their own heads (I of course do not mean to make light of our economic problems, only to point out that they need not effect us as investors — it is the Passive Investing model that doubles the impact of our economic problems by making them investing problems as well).
Rob