Ramit Sethi suggests that it is important to invest in long-term gains instead of paying attention to daily dips and trends.

John Fourier

2018-10-30 10:41:00 Tue ET

Personal finance author Ramit Sethi suggests that it is important to invest in long-term gains instead of paying attention to daily dips and trends. It is futile to time the stock market. Wild and unpredictable fluctuations can confuse stock investors who miss informative fundamental factors from time to time.

Investors should play the long game by spending a sufficient amount of time in small-to-mid-cap profitable value stocks that exhibit conservative capital investment. This value investment strategy yields an 8% stock market return net of inflation on average.

If the investor stays in the U.S. stock market with his or her $10,000 investment during the 20-year sample period from 1998 to 2017, the long-run S&P 500 average return is 7.2%. However, if the investor misses the top 10 days of hefty stock market gains, he or she earns only 3.5%. 

For this reason, rational investors should aim to persist throughout transient stock market ebbs and flows for sustainable shareholder value maximization. Long-term stock market returns consistently conform to the normal distribution with fat tails or leptokurtic extreme outliers.  Insofar as the investor can persevere in his or her multi-year value investment strategy, this strategy helps reap reasonable rewards in due course.


 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Tony Robbins recommends portfolio optimization only once a year.

Laura Hermes

2017-02-19 07:41:00 Sunday ET

Tony Robbins recommends portfolio optimization only once a year.

In his recent book on personal finance, Tony Robbins recommends that each investor should rebalance his or her investment portfolio *only once a year* to in

+See More

Empirical tests of multi-factor models for asset return prediction

Apple Boston

2022-02-25 00:00:00 Friday ET

Empirical tests of multi-factor models for asset return prediction

Empirical tests of multi-factor models for asset return prediction  The capital asset pricing model (CAPM) of Sharpe (1964), Lintner (1965), and Bla

+See More

The European Central Bank expects to further reduce negative interest rates with new quantitative government bond purchases.

Laura Hermes

2019-10-17 08:35:00 Thursday ET

The European Central Bank expects to further reduce negative interest rates with new quantitative government bond purchases.

The European Central Bank expects to further reduce negative interest rates with new quantitative government bond purchases. The ECB commits to further cutt

+See More

A physicist derives a mathematical formula for success.

Chanel Holden

2019-03-07 12:39:00 Thursday ET

A physicist derives a mathematical formula for success.

A physicist derives a mathematical formula that success equates the product of both personal quality and the potential value of a random idea. As a Northeas

+See More

With its novel SnapChat app, Snap IPO achieves $30 billion stock market valuation!

Olivia London

2017-03-03 05:39:00 Friday ET

With its novel SnapChat app, Snap IPO achieves $30 billion stock market valuation!

As the biggest IPO since Alibaba in recent years, Snap Inc with its novel instant-messaging app SnapChat achieves $30 billion stock market capitalization.

+See More

President Trump nominates Jerome Powell to be the new Federal Reserve chairman.

Fiona Sydney

2017-10-03 18:39:00 Tuesday ET

President Trump nominates Jerome Powell to be the new Federal Reserve chairman.

President Trump has nominated Jerome Powell to run the Federal Reserve once Fed Chair Janet Yellen's current term expires in February 2018. Trump's

+See More