I was talking with a friend yesterday and she was asking how much money I can gain or lose in a single day and if I was worried about a stock market crash, or not.
Short Answer: I can gain or lose $3000 or $4000 or even more in a single day and I’m not worried about it.
Here’s why: the gains or losses in my portfolio are not actually real gains or losses because they’re unrealized. They’re only realized once I sell the stocks and lock in either the loss or the gain. As long as the same number of shares remain in my portfolio, it doesn’t matter what the actual price of them is. Since I invest for the very long-term with a 20 or 30 year horizon, I’m truly not worried about the daily, monthly or even yearly fluctuations in my portfolio. Stocks historically have returned about 10% per year over the long-term and there’s no reason to think that they won’t do so in the future.
It all comes back to fear and greed and avoiding the herd mentality. Control your emotions and do the opposite of what everyone else is doing.
For any teacher investor types (like me) out there, check out this book by Andrew Hallam: Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School. I think you’ll enjoy it.