10 truths about the stock market

📈 The stock market often frightens many people. Volatility, sharp price drops, economic crises, unpredictable news, and global events create the impression that investing resembles a game of roulette. But the truth is that with the right approach and a long-term strategy, the stock market almost always becomes a source of capital growth. Understanding the basic principles of how the market works helps maintain calm during periods of instability and make well-founded investment decisions.

What an investor should remember:

1. Time in the market is more important than attempts to catch the perfect moment. History shows that over the past hundred years the market has gone through wars, financial crises, economic downturns, global epidemics, and political shocks, but despite all these events, the general trend has been steadily upward. Systematic investing and holding assets for long periods, even during declines, produces significant results.
   
2. Short-term drawdowns are normal. The average annual drawdown of the S&P 500 index fund is about 14 percent. This means that even strong and stable companies periodically experience price declines, which is a natural mechanism of market correction. It is important for an investor to understand that temporary price decreases are not a catastrophe but part of the market cycle.
3. You should not expect a smooth average return. People often hear the figure of 10 percent annually for the US stock market, but this is an averaged indicator over decades. In specific years returns can be much higher or much lower than the average. The main task of an investor is to see the long-term trend, which historically shows steady growth.
   
4. The main drivers of prices are the fundamental indicators of companies, such as profit, revenue, profitability, and growth prospects. The market may react to news, rumors, or emotions, but long-term changes in prices are always linked to the financial health of companies. An investor who focuses on fundamental data reduces the risk of making decisions based on panic or short-term speculation.
5. Risks will always exist. Volatility and uncertainty are a natural part of the market. It is precisely for taking on these risks that investors receive a premium, the opportunity to earn more than on stable but low-yield assets such as bonds or deposits. Understanding and accepting risks makes it possible to build strategies with an optimal balance between returns and safety.
   Diversification is a key tool for reducing risks.
   
6. Distributing investments among different sectors, companies, and regions helps lessen the impact of individual failures on the overall portfolio result. Even if one industry or a single stock falls, other assets may offset the losses.
7. Regularity of investments is more important than attempts to catch the market. Systematic monthly or quarterly contributions help smooth out the effect of volatility and take advantage of average purchase prices during fluctuations. This strategy is known as dollar-cost averaging and has proven effective over decades.
8. Emotions are a poor adviser in the market. Panic during a decline or greed during a rise often leads to unjustified actions: selling assets during a downturn or buying at the peak. Reasonable discipline and a pre-thought-out strategy help avoid such mistakes and keep investments on a long-term horizon.
   
9. A long-term investment horizon almost always yields a positive result. History shows that over 20-year periods the stock market has never been negative. This means that an investor who holds a portfolio for two decades is highly likely to achieve capital growth despite temporary declines and economic crises.
   
10. Investing is not a quick way to get rich but a systematic approach to working with capital. Success comes to those who build a strategy, consider risks, monitor fundamental company indicators, and maintain patience. Consistency and discipline are more important than attempts to guess short-term movements or the “perfect moment” to enter the market.

Conclusion: do not try to guess the bottom or the peak of the market — this is practically impossible even for professional investors. Regular investing, diversification, and a long-term horizon are the key to successful capital accumulation. Even if the market falls tomorrow, in 5–10 years it will most likely be significantly higher.

Do you invest regularly, or are you waiting for the “perfect moment” to start? Market history and statistics support those who act consistently rather than emotionally.

🔥 Bonus: over 20-year periods the stock market has always shown growth. This fact is worth remembering when short-term declines seem frightening. Invest wisely, not emotionally, and remember that discipline and a long-term strategy…