A few months ago, I saw that a few flights jumped the pond from the US to Europe in near-record speed, some surpassing the speed of sound. With this combination of cold northeastern air mixing with warm southeastern air, the conditions were perfect for a strong tailwind to get the flights to their destinations in a much shorter period of time. Multiple flights were clocked at ground speeds of over 800 MPH, which is about 200 MPH faster than the average flight.
It's amazing how being in the right place, at the right time, can help you get where you want to go a lot faster.
I'm sure when these people booked their flights, none of them booked it because they researched the meteorological conditions and found that this perfect coincidence of air pathways was going to converge at the exact time they entered cruising altitude allowing them to get to their destination almost an hour early. They were all just on the flight, in the right place, at the right time.
When you are saving money each month, and you feel like it's time to start investing, it's tempting to start to do a bunch of research and read a lot of blogs about the best places to invest your money for returns this year. There is no shortage of articles about "the top stocks for 2025", or the "Forget Nvidia: these are the next Ai stocks to buy now". All these people/pundits/journalists are doing is trying to time the market. It's an impossible task that sounds intriguing, but hasn't been able to be replicated consistently over time. And depending on when you read their article or listen to their snippet, you may be right or wrong over the next month.
When you start the journey of investing, you want to book a plane ticket and get on the flight. Of course you'll do some research to figure out where you want to go, the time you want to leave, and you may even look up the type of plane (to make sure it's not a 737-MAX - I flew on one the other day and held my breath the whole time - just kidding, it was fine, but I did close my eyes on takeoff!), but once you buckle in, just "sit back, relax, and enjoy the flight."
You're bound to hit some turbulence along the way and it may get a little bumpy. Fun? No. Normal? Yes. It's nothing to panic about. Think about where you are going. Think about the destination. Enjoy the journey.
A few weeks ago, the S&P 500 was down almost 15% in 4 days. That's a heck of a drop in a short period of time. What's wild is after that 4 day drop, markets jumped about 10% in one day, and ended up having one of it's best weeks in years!
The reality is when it comes to investing, it's all pretty similar to flying. You do some research on what you want your strategy(s) to be, what asset classes and sectors of the economy you want in your portfolio, how the companies are being run and if their valuation metrics are favorable, and then you buy a ticket (or share) and buckle in for the ride. The only difference is when you are investing, for better or worse, it's easy to get out if you don't like the ride. If you try that on an airplane, you'll have an Air Marshall tackle you and the FBI waiting for you when you land. Slight difference.
That's why people who stay disciplined, and stay invested through turbulent markets, tend to outperform over time. Another point is that everyone is pretty well convinced that passive investing tends to beat active investing over time. Sure there are times when that isn't the case, but most of the time passive investing, which is defined as "long-term strategy where investors buy and hold securities, and it's a hands off approach that focuses on diversification and long-term growth", tends to outperform active.
Well the irony is that the passive investing majority of individuals become active investors when markets are turbulent and volatile. People want to start timing the market and invest in the good times and not through the tough times. Imagine the person who panicked on that Tuesday when markets had almost dropped by 15% in 4 days, and then got out of the market. Guess what happened?
They missed out on a 10% up day!
Then they get back into the market on Thursday and take it on the chin when the market drops another few percentage points. Not smart!
Don't be a passive investor only when it suits you. Be a passive investor habitually. Stay the course. Stay on the plane. Don't get tackled by the Air Marshall and get put on the "No Fly List".
Sit back, relax, and enjoy the flight.
Blake