There’s nothing like good market volatility. It makes me sleep well at night. Plunging prices, several days of bad news, it makes me all smiles. No, I’m not a masochist. I just know that weak-minded investors become nervous and sell in a roller-coaster market, and that gives me more opportunities to buy at cheap prices.
How important is it to watch the stock market? Not important at all. Here is advice from two of the best investors I know. “The stock market is a giant distraction from the business of investing,” says John Bogle, founder of Vanguard Group of mutual funds.
When you own all the fish in the ocean, you don’t have to worry about where the fish are. Total market index funds are managed to track the return of all securities in the market. It doesn’t matter which part of the market is up or down because you own it all.
Emerging market stocks had a difficult year in 2013. They’re having a rougher year in 2014. The usual suspects are being blamed: rising interest rates, fears of a global economic slowdown, bubbling real estate prices in parts of the world coupled with a looming bank crisis, political turmoil in some countries, and the list goes on. In the words of the late Yogi Berra, “It’s déjà vu all over again.”
Markets are not exchanges, exchanges are not indexes, and indexes are not investments. Yet, these words are often interchanged in discussions about index investing. I hope this will add some clarity to the discussion.