Quote:But when it corrects you lose all that money you've slowly and responsibly made. I have zero faith in the stock market, I saw to many people who had been responsible and did as they where told lose just about everything in the last recession. Then I watch our politicians and banks doing the same thing all over again and I say well history says it's going to correct itself again one day. So all those people making safe investments are going to get screwed again at some point.

 

The real goal is to get out before the screw job comes, to me that's just insane. Give me land, land is never worth zero.

 

Like someone else said, when it corrects downward, you only lose if you lose your nerve and sell.   That's the only way someone would have lost in the last recession.   And even then, they couldn't possibly have lost everything, unless they were doing something extremely risky and foolish.  

 

People seem to think stocks are just little pieces of paper that have no inherent value.  But when you buy a stock, you buy a piece of a business.   It's the same as buying ownership of a tire store on Normandy Blvd.  Or owning a Chik-Fil-A.   If the business is making money, you're making money.   If GE is making 10 cents for every dollar that their stock costs, then you are making 10 cents on the dollar investing in GE.   The price of the stock may go up or down on a temporary basis, and that scares a lot of people, but if the company you invest in is making money, then in the long run the stock will go up and/or they will send you some of that profit.  

 

Where people lose is when they try to beat the market.   That's the average neophyte investor, who thinks he can use charts or technical analysis or some other shortcut.   If that stuff worked, we'd all be rich.  It doesn't work.   The only way to beat the market with individual stocks is to understand businesses.   That's how Warren Buffett made his fortune- by gaining a great understanding of the businesses he was investing in.  But I'm not Warren Buffett, and I'm too lazy to put in that kind of hard work.   So I just buy index funds.   In the long run, it's the best investment there is.   Why try to beat the market when you can get rich just getting the long term market average?   That requires no work at all.   If you try to beat the market, you will probably lose, because then you are competing with very large blocks of money being run by some very smart people with incredible resources.  

 

I'm thrown by your sentence about seeing people lose everything when the market does down.  They had to be doing something incredibly stupid to lose everything like that.  

 

Warren  Buffett's rules of investing: 

1) Don't lose your money.

2) Don't forget rule #1.  

 

You want to know a sure fire way to lose money?   Try to beat the market. 

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