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Don’t Make Me Say I Told You So 179

volatility, but periods of uncertainty can create wealth-building
opportunities for the patient, diligent, long-term investor.

Successful market timing during a decline is extremely

difficult, if not impossible, because it requires two near-perfect
actions – getting out at the right time and getting back in at the
right time. Fortunately for investors, it’s not necessary to try to

time the market in order to be successful. Remaining invested

in up and down markets has proven to be the most reliable
strategy for making money over a long period.

Let’s look at a scenario in which you are investing $1,000 into
a stock or mutual fund each month for 10 years. In scenario A,
the stock is always at $10 a share over that 10-year period; in

scenario B, the stock starts at $10 a share in year one, drops $1

each year up to year five, then back up $1 a share per year until
it reaches $10 per share again.

Making Money In A Down Market
Assumes a $1,000 investment each month.
Constant $10 per share Scenario B - Now $9 a share
Scenario A – Constant $10 per share Scenario B – $10 a share
1,200
1200 1500
1,333
1000 1,200
900 1200
1,000
800 900
Shares 600 Shares 900
600 667
600
600
400
300
300 333
300
200
0 0
After 1st Quarter After 2nd Quarter After 3rd Quarter After 4th Quarter After 1st Quarter After 2nd Quarter After 3rd Quarter After 4th Quarter
Total Shares After 1 Year 1,200 1,200 Total Shares After Year 2 2,400 2,533
Chapter 4: The Most Common Investor Mistakes