I've read a lot about personal finance, and I think I have the career, budgeting, saving and money distribution tied down tightly, but there is something in the plan that irks me.
It seems that most of the investing financial advise is written in the US, based on US markets, laws and lifestyle. The basis of long term investment resides in knowing that the market, over time, will go up. It may go down, we may see bull markets or global crises but if you keep buying regularly in the end you will be at a net positive and able to safely withdraw from your funds, unless exceptionally "unlucky".
That to me doesn't feel completely right. Let's take a look at the S&P 500 graph. You can clearly see the dot-com bubble, the 2008 financial crisis, the great state of the stock market right now, etc. The most important part is, after each recession you will need to wait 5 years as a worst case scenario to get back to where you were before, thus making long-term investment a viable and safe solution. Great, right?
Now, in europe we have what could be similar to the S&P 500 index and we can take a look at the graph of the EUROSTOXX 50 index. Granted it is not the exact equivalent as it is 500 vs 50 companies, but the EUROSTOXX index is supposed to paint a pretty accurate picture of the european stock market. Again we can see the same historical points as in the graph before, but with a difference: this index has not seen a recovery from those moments in the market. The same exact thing can be seen in an index tracking the top 35 companies in the stock market for my country. If you were to have bought stock in 1998, you would be at the same exact point now almost 20 years later.
The naive solution seems obvious, invest in the US market instead of your local market. Forgetting about coin exchange and higher comissions for foreign markets, to me it raises important questions: Why is long-term advice right? We have historically seen that it is true, but is the european market so different? Is there a chance that what we have seen is, well... chance?
Do you have any insights on this? Am I missing something really important about this? Because, right now, I don't feel at all confident about the future of the stock market.
Submitted January 08, 2018 at 08:04AM by BottledPeanuts http://ift.tt/2AG8lzf
