We all believe we’re independent thinkers, yet the data tells a sobering story: the average investor has spent the last two decades paddling against a powerful financial tide. While the S&P 500 delivered a long-term average return of 10% annually, individual investors have been stuck at 5%. Why? Because we constantly trade our long-term map for the Tyranny of the Immediate.
Focusing on next week’s noise instead of the next 18 months is a guaranteed way to underperform. Stanley Druckenmiller, who generated a legendary 30% annual return for three decades, didn’t have a crystal ball. He simply had a longer runway. He was mapping the terrain for the year ahead, not staring at the hood ornament. His success is proof that being long is a far more reliable strategy over time.
The Financial Fallacy
This brings us to the most expensive lie in finance: the belief in symmetry. The idea that market drops and rises are equal is a fallacy. The market is structurally engineered to rise: bull markets last 3.8 times longer than bear markets, and stocks rise about 70% of the time. When you short or bet on a massive downturn, you aren’t being clever; you are betting against financial gravity itself.
Also, please stop believing the system is rigged against you. Recognize that it is built for upward mobility. From engineered corporate earnings (where 75% of S&P 500 companies consistently beat expectations) to a Federal Reserve and politicians incentivized to promote confidence, powerful forces are aligned to keep assets buoyant. This is your persistent tailwind. Why would you fight it?
The Only Way to Win
Sure, there will be times when stocks will decline. Be ready. The true test of an investor is having the discipline to buy when the market is on sale, when fear is loudest, and when every talking head is whispering, “It is different this time.”
If you flee to cash during a dip, you are statistically guaranteed to miss the recovery: 90% of stock gains occur on just 10% of trading days. Missing those few crucial days causes the long-term underperformance shown by the Dalbar data.
The key to victory is simple: Trust the upward trend. Do not fight the financial tide. If you find yourself betting against the market moving higher, you’ve fallen for the most expensive lie. Embrace the weakness. Buy the opportunity.
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