\1 Are you ever afraid of investing at market peaks?
Of course you are. So am I.
But…you shouldn’t be.
This is a tweetstorm on why not to worry about investing at market peaks, as told from the world’s worst market timer.
\2 The world’s worst market timer in our story goes by the name of Bob and he started his career in 1970 at the age of 22. Bob saved $2,000 a year for 3 years before making his first stock purchase in December 1972.
\3 Shortly after his purchase, Bob experienced the brutal bear market of 1973-74 where stocks declined by 50%. Bob didn’t sell his stocks, but he decided to wait before investing any more of his savings going forward.
\4 After nearly a decade and a half of saving money, Bob felt comfortable again to buy stocks. So, in August 1987, he invested $46,000 (his additional savings since 1972) in the market.
However, in October 1987 the market crashed, down ~30% from its high.
\5 Once again, Bob didn’t sell, but was scared to put anymore money in the market for a while. He focused on saving money until the coast was clear.