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  • Writer's pictureJoe Woodhouse

How to NEVER Lose Money in The Stock Market

14.2! This is the most important number to remember when it comes to investing in the stock market, and once you understand it. You cannot lose money

Since 1980, per calendar year, The S&P 500 has been up 75% of the time and only down 25% of the time. And as the stock market bounces around constantly the average intra year decline, ie from the top point to the bottom point is 14.2%. 

What Is the S&P 500 Index?

The S&P 500 or Standard & Poor's 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index is widely regarded as the best gauge of large-cap U.S. equities, and also represents approximately 60% of the Global Stock Market.

What Is An "Intra Year Decline"?

For example, let's say in January the stock market starts at 10, over the next couple of months due to whatever is happening in the news it drops to 8, but the market then picks up and finishes on 11 at year end. During that year there's been a 20% "intra year decline" but it's irrelevant because you started at 10 and the market at year end is at 11. Ie. You've made 10%.

Why Is This Important?

If you understand these numbers, you are in a position to be a successful long term investor, so when you turn on the news tomorrow and hear that the stock market has retracted 11% over the last quarter, you can smile and say to yourself, that's a good year, it’s normally 14%, they won’t tell you this is like clockwork and will bounce back, they’ll just blame it on BREXIT or Donald Trump and shock you with a headline. 

These short terms peaks and troughs are expected. It's called volatility, aka the unpredictability of prices up and down across a long term trend line. 

The markets WILL go down as well as up over the short term but over time the stock market will only ever continue its advance, as decade after decade this is proven. don’t let what you heard this morning on the TV impact your decisions around money, it is just noise, shut it out. The market has 2 periods, a rising market, and a sale, it’s that simple, all the declines are temporary and the rise is permanent. 

The Best Way To Invest?

Buy and hold, and keep buying! And no matter what the world throws at you stick to the plan, because over time you cannot lose, the only people that lost money in the 2008 crash are the ones who let emotion get in the way and pulled out of the market, had you kept investing you would laughing by now. Most financial crashes fully recover within 2 years, let me repeat that, most financial crashes fully recover with 24 MONTHS. So the next time Trump opens his mouth, or Theresa may struggles to open hers, DON’T PANIC! Because it’s about time IN the market. Not TIMING the Market.


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