I still remember vividly the day I started to learn how to ride a two-wheeled bicycle.
My mom and I were in East Coast Park back in 2003 when she suggested we rent a bike to cycle around.
Since I didn’t know how to cycle, my mom promised to teach me. She was an expert cycler.
So we made our way to the nearest bicycle rental shop and rented an ol’ trusty bicycle.
We then pushed the bicycle to a flat terrain without any obstacles.
I got on the bicycle and adjusted the seat to an appropriate height for myself.
The lesson started shortly thereafter.
Losing Balance
My mom told me to use my right leg to push down on the right pedal and lift up the left leg to place it on the other pedal.
It was clearly a challenge for a newbie.
After many unsuccessful attempts, I finally managed to put both legs on the pedal while propelling myself forward for a grand total of three seconds.
That was when I lost my balance and had to put my legs down to stabilise myself.
The putting-legs-on-pedal-and-losing-balance part continued for some time.
Mother quickly noticed that my eyes were focused on the front wheel every time I got both legs on the pedal.
The Houdini Magic
My mom offered me a life-changing tip at that point.
She said that the trick to cycling well is to look far ahead and not on the wheels.
Voila!
That trick worked like magic.
Because with that tiny but powerful tip, I was cycling through East Coast Park unassisted in no time.
And I was having a ball of a time feeling the wind rush against my skin.
Focusing on the Horizon
Investing is very much like cycling.
The trick to riding successfully is to look far, far ahead.
Looking forward to where we want to go, instead of focusing on the wheels, helps to maintain our balance and know where we’re headed.
Similarly, in investing, we want to look ahead, far into the future, and not on the daily movements of the stock market index.
A Non-Event
Over the short term, the market moves according to the sentiments of its participants.
Generally, when investors are pessimistic, markets fall, and when investors are optimistic, markets rise.
The coronavirus-driven market crash in March 2020 and the recovery thereafter is a great testament to this.
Since closing at a then-record high of 3,386 points on 19 February 2020, the S&P 500 index plummeted 34% to hit bottom for the year on 23 March.
However, since then, the US stock market has gone on to hit many new highs.
Mind you, the stock market recovery happened even when the pandemic was still raging in many parts of the world, with second and third waves hitting many countries.
Decades later, though, the 2020 crash would become a small blip in the market, just like past market corrections and crashes.
Because over the long run, history has shown that stock markets move up and to the right.
Ignore the Noise
In the investing world, having a long-term horizon is all that matters.
The longer we hold on to stocks, the probability of losing money goes down significantly.
For example, making money in the stock market on a daily basis is essentially like a coin flip.
But in any rolling 20-year period, we would end up in the positive territory.
If we keep looking at the daily stock market price changes in fear of “falling”, what we fear may come to pass.
That is, we may sell stocks emotionally, and we get nowhere.
When in fact, we should be riding through the stock market volatility with the long term in mind.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.
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