Page 80 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

It’s the same in investing.

COBACOBA
Most financial advice is about today. What should you do right now, and
what stocks look like good buys today?

But most of the time today is not that important. Over the course of your
lifetime as an investor the decisions that you make today or tomorrow or
next week will not matter nearly as much as what you do during the small

number of days—likely 1% of the time or less—when everyone else around
you is going crazy.

Consider what would happen if you saved $1 every month from 1900 to
2019.

You could invest that $1 into the U.S. stock market every month, rain or
shine. It doesn’t matter if economists are screaming about a looming
recession or new bear market. You just keep investing. Let’s call an investor
who does this Sue.

But maybe investing during a recession is too scary. So perhaps you invest
your $1 in the stock market when the economy is not in a recession, sell
everything when it’s in a recession and save your monthly dollar in cash, and
invest everything back into the stock market when the recession ends. We’ll

call this investor Jim.

Or perhaps it takes a few months for a recession to scare you out, and then it
takes a while to regain confidence before you get back in the market. You
invest $1 in stocks when there’s no recession, sell six months after a
recession begins, and invest back in six months after a recession ends. We’ll
call you Tom.

How much money would these three investors end up with over time?

Sue ends up with $435,551.

Jim has $257,386.

Tom $234,476.