019 | JL Collins | The Stock Series | Part 1

Market Crashes

JL Collins shares insights on historical market crashes, emphasizing the importance of maintaining a long-term perspective. He recounts how an article claiming that "buy and hold investing doesn't work anymore" inspired him to start the Stock Series, challenging the notion of short-term trading strategies 1. Collins argues that despite market fluctuations, the overall trend is upward, as evidenced by historical data 2.

The market is always going to stumble or have corrections, which are defined as a 10% drop, or bear market, which is defined as a 20% drop, or a crash, which is 30. I mean, those things are routine. Nobody can predict when they're going to happen, but it's just part of the process and you have to be willing to accept it.

--- JL Collins

He stresses that understanding this pattern is crucial for investors to avoid panic during downturns.

   

Investment Realities

The realities of investing include the inevitability of market downturns and the stress they can cause. Collins highlights the importance of staying the course during market crashes, using the 2008 financial crisis as an example 3. He advises investors to prepare mentally for significant losses, as these events, though rare, are part of the investment landscape.

When the market hit its bottom, nobody knew that it was hitting its bottom. And every smart person I know who was paying attention to this stuff in March of 2009 was predicting that it was going to go much, much lower.

--- JL Collins

Collins also warns against the allure of stock picking, noting that even legendary investors like Warren Buffett are exceptions rather than the rule 4.