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The Old Ideas on Saving & Investing Don't Work -- Here's What Does

Valuation-Informed Indexing #623: Understanding Swings in Psychology Is the Key to Understanding Stock Investing

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I’ve posted Entry #623 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Understanding Swings in Psychology Is the Key to Understanding Stock Investing.

Juicy Excerpt: The stock market is nuts. It really is. Prices go up crazy amounts for crazy reasons. And prices go down crazy amounts for crazy reasons.

That scares us humans. Most of us have our retirement money invested in stocks. To cope with the fear, we cover our eyes at all the craziness. We tell ourselves that investors are rational and that the market is efficient. It really doesn’t matter so much when prices go down crazy amounts for crazy reasons, we assure ourselves. The stock market always comes back in time. Just hang in there. Buy and Hold. Tune out the noise.