Will the stock market ever go back down?

The stock market will go up and up and up without ever coming back down (aside from some temporary volatility along the way).‎

To understand why, you need to shift your mental model of what the stock market is. It’s not really an auction where the price could go up or down across any range or even to zero. It’s actually a measure of the all time cumulative output of the companies of the world. Those companies are constantly generating revenue, profits, and paying out dividends. Those dividends are being collected and measured by the “total growth” of the stock market. ‎

So if you buy into the stock market today and hold for decades, your investment will collect those dividends, which you can reinvest to buy more, and you’ll experience that compound growth of your investment. It has to go up, because those profits are always being poured back into itself and measured in total growth. So the growth of the stock market is measured more like the odometer on a car than an auction (with some volatility from speculation along the way). It has and will continue to go up and up and up!‎

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎


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Jeremy Circle

Hi, I’m Jeremy! I retired at 36 and currently have a net worth of over $4 million. 

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