\1 Visualization tweet storm
Historically, the U.S. stock market has had long-term positive real returns for most of its history (regardless of valuation). These long-term returns tend to converge:
Historically, the U.S. stock market has had long-term positive real returns for most of its history (regardless of valuation). These long-term returns tend to converge:
\2 However, this market behavior is characterized by quick drops and slow recoveries. 
\3 But, every crash is different, so don't try to market time. It is very hard to do. 
\4 Diversification helps, except during major crashes when correlations trend to 1 and most risky assets fall together. Check out this network plot of correlations during the GFC: 
\5 Also remember that when you diversify that asset performance is relative and varies over time:
\6 Even the safest assets (i.e. bonds), don't guarantee safety either. Check out how U.S. bonds did not provide principal protection for 4 decades! 
\7 This is why saving is so important. Little decisions early on have huge impacts later. This should be a constant reminder.
\8 More specifically, your savings matter far more earlier. Why? Because your savings represent a larger portion of your wealth initially, but much smaller later as you gain assets. At that point, investment returns dominate: 
\9 And why do we do this? To replace our human capital with financial capital. We need our assets to go to work for us. Best of luck and happy investing from Of Dollars and Data.
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