I’ve been very restrained with regard to posting. This board has grown over the years such that it’s impossible (for me) to read every post as I used to. Therefore, I have developed the habit of reading every post in a thread before I post, if I have nothing new to add, I don’t repeat what someone else has already said.
That being said, I’m making an exception this time.
First, I wish to cast my vote for Saul as an 11 on a 1 - 10 point scale. My association with Saul’s investing discussions has literally changed my life. My primary contribution was belief. I know a lot of people; intelligent, logical, rational people who reject the notion that you can out-perform the market. In fact, efforts to do so are so risky that you are very likely to lose everything and end up much worse off than you might have been had you only taken the reasonable, safe, slow but steady safe route of a blend of blue chip corporate stock and AAA bonds (or however they’re rated). And that would be especially true for someone of my age, after retirement with only a pension and social security income.
“You must be insane to cast your entire life’s savings into those crazy high risk growth stocks. The stock market is nothing but a fancy roulette wheel, the house always wins, the players always lose” is the kind of advice I would have received had I asked any of my friends what their thoughts might be. I’m so glad I never asked. Rather, I read Saul’s story and I believed it.
The other thing I will add is related to what Saul calls his “family emergency fund.” Up until earlier this year, I had no such fund. Every penny I had other than current living expenses was invested in the market. When the pandemic hit in force, I panicked. I was convinced, or more accurately, I convinced myself that this time it really was different. There was nothing like this in recent history and the outcome was going to be total financial collapse. I rather suddenly viewed the market as a very hostile environment for the substantial wealth I had built over the previous few years. Taxes be damned, I sold everything.
I make no excuses. It was an irrational act born of fear. I maintained that folly while watching what would have been the growth in portfolio continue to swell upwards had I done nothing. Fortunately, I regained my sanity after about 6 weeks. I re-entered the market, but this time I held back a sizeable chunk of cash - call it a family emergency fund. Or maybe call it a security blanket. In any case it was (and remains) sufficient funds to maintain a comfortable lifestyle for 18 - 24 months. This is the amount of time I deemed sufficient for the market to recover irrespective of what calamity might befall the economy.
It’s incredible that Saul is up over 200% on the year. Incredible, yet totally believable. I, even with my spring time folly am up just about 100% for the year. To say the least, my estimation of the impact the pandemic was to visit upon my portfolio could not have been more incorrect.
My advice. Believe Saul. It’s never too late to start investing. You have not “missed the boat”. There’s yet another boat waiting at the dock. Get on board. But, at the same time do your best to reserve some cash for emergencies. At first you may not be able to reserve 18 - 24 months as I have, maybe 2 - 3 months is all you can hold back. But as your portfolio grows, take a little more out for emergencies, comfort and security. Eventually, you will have coverage that should cover you for several many months. Other than that, stay invested. Ignore the roller coaster of the periodic swings. The trend is up. Believe it.