More on this book
Community
Kindle Notes & Highlights
invest in index funds.
The past is not necessarily prologue to the future.
you don’t have to predict the future to win this game.
One study showed that 96% of mutual funds failed to beat the market over a 15-year period.I The result? You overpay for underperformance. It’s
If you overpay by 1% a year, it will cost you 10 years’ worth of retirement income.
By starting earlier, the compound interest he earns on his investment adds more value to his account than he could ever add on his own.
you’ve got to save and invest—become an owner, not just a consumer.
Pay yourself first by taking a percentage of your income and having it deducted automatically from your paycheck or bank account.
When any market falls by at least 10% from its peak, it’s called a correction—a
When a market falls by at least 20% from its peak, it’s called a bear market.
Freedom Fact 1: On Average, Corrections Have Occurred About Once a Year Since 1900
On Average, Corrections Have Occurred About Once a Year Since 1900
there’s been a market correction every year since 1900.
Historically, the average correction has lasted only 54 days—less than two months!
the average correction has lasted only 54 days—less than two months!
in the average correction over the last 100 years, the market has fallen only 13.5%. From 1980 through the end of 2015, the average drop was 14.2%.
Freedom Fact 2: Less Than 20% of All Corrections Turn Into a Bear Market
Less Than 20% of All Corrections Turn Into a Bear Market
It turns out that fewer than one in five corrections escalate to the point where they become a bear market. To put it another way, 80% of corrections don’t turn into bear markets.
80% of corrections don’t turn into bear markets.
Freedom Fact 3: Nobody Can Predict Consistently Whether the Market Will Rise or Fall
Nobody Can Predict Consistently Whether the Market Will Rise or Fall
Freedom Fact 4: The Stock Market Rises over Time Despite Many Short-Term Setbacks
The Stock Market Rises over Time Despite Many Short-Term Setbacks
The S&P 500 index experienced an average intra-year decline of 14.2% from 1980 through the end of 2015. In other words, these market drops were rema...
This highlight has been truncated due to consecutive passage length restrictions.
the market ended up achieving a positive return in 27 of those 36 years. That’s 75% of the time!
Despite a 14.2% average drop within each year, the US market ended up with a positive return in 27 of the last 36 years.
Historically, Bear Markets Have Happened Every Three to Five Years
corrections happen regularly; that nobody can predict when they’ll happen; and that the market usually rebounds quickly, resuming its general upward trajectory.
That’s a rate of one bear market every five years.
the S&P 500 has dropped by an average of 33% during bear markets. In more than a third of bear markets, the index plunged by more than 40%.
In more than a third of bear markets, the index plunged by more than 40%.
“The best opportunities come in times of maximum pessimism.”
Bear Markets Become Bull Markets, and Pessimism Becomes Optimism
Because the stock market isn’t looking at today. The market always looks to tomorrow.
What matters most isn’t where the economy is right now but where it’s headed.
every single bear market in US history has been followed by a bull market, without exception.
