By By Charlie Bilello of COMPOUND
“Whether you’re excited or nervous when your favorite asset falls in price marks whether you’re investing or merely speculating.” – Naval Ravikant (Founder of AngelList)
Are you investing or merely speculating?
Naval Ravikant had an interesting take on this most important of questions. The deciding factor: whether you’re “excited” or “nervous” to see your investment going down in price.
Why would anyone ever be excited to see something they own moving lower?
Because it is giving them the opportunity to reinvest interest/dividends and add new capital at discounted prices. If you have a long enough time horizon and a diversified portfolio, buying at lower prices will increase your long-term return potential. Which is why a stock market crash is actually the best thing that could happen to young investors.
How do you know if your time horizon is “long enough?”
Examine the odds… read more