I first invested in the market just over a decade ago. I was two years out of school, was fortunate to have savings, and thought it was time to do something with said savings.
I read a few books on investing – by the likes of William J Bernstein and Ramit Sethi – and learnt about index funds. I didn’t live in the US – so I needed to find a place that traded the corresponding ETFs or Exchange Traded Funds. I also didn’t know anything about this and didn’t know anyone in my circle of friends who was doing this.
So I reached out for help to a wiser friend I’d gotten to know and also ended up exchanging notes with the wonderful Derek Sivers. As part of this, I had a memorable exchange with Derek when I asked – how do I know I’m investing at a good time?
He explained that he had debated entering the market in 2009. Someone had told him to wait to see if the market went down further. It never did. His net worth would have been incredibly high if he’d just invested instead of waiting two years. I remembered a quote in William J Bernstein’s book – “Time in the market beats timing the market” – and decided to take the plunge.
I ended up having to sell all my investments just about two years into my first plunge to pay for graduate school. I remember feeling so grateful for these investments – 2013-15 was a good time to be invested in the market. Those investments were one of three things that helped me/us get out of graduate school debt free. The other two were a second-year tuition scholarship and my wife’s income.
It took a couple more years to build some liquidity before investing in the market again. And as I look back over the past 6 years, I realize I’ve had a knack of timing my sales at the worst possible time.
For a brief period in 2019, I thought I’d invest in individual stocks. A few months in, I realized that this wasn’t for me. Funnily, the two stocks I’d decided to invest in were Nvidia and Amazon. I sold them both at a loss as I exited the single stock game.
Both have done more than fine since.
As I was on my way out of the self-managed game, I finally decided to work with Vanguard’s managed services. However, I still held onto the index funds I’d invested in when I was going it alone. And as I was looking back at my history this past weekend, I realized I went on a simplification spree and went all in on the managed services in mid-2020.
Those indexes did phenomenally well in the 18 months since.
I share this because, well, this is a learning blog. And where would the learning be without spectacular failures such as these?
But I also share this because that adage – time in the market beats timing the market – has been true in the past 10 years. The investments I’ve consistently contributed to and then left untouched for long periods of time have done the best. The only requirement with these was to contribute to them regardless of whether the market is up or down. And I’ve managed that.
There is no guarantee a simple index fund approach will work forever – past performance doesn’t guarantee future performance. But we’ll deal with that when it comes.
For now, I’m left to reflect on some of the hard-won lessons the market has taught me – both about the market and myself. Ultimately, all of this comes down to finding an investment approach that works for us. I’ve learnt that playing the market is a game that is best left to others.
Much like writing on this blog, I work best when I work with consistency, equanimity, and time.
