Investing: It's Like Riding a Bike
Eden is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Is our money safe in the stock market? This is the question that many are asking as the market recovers from the recent financial crisis. Regardless of the cause, the recent recession resulted in a loss in many portfolios.
It is for the disheartened investor that I write today. I argue that the time to invest is during an economic recovery. Let’s compare a bicycle to the financial market. Would you invest in a bicycle if you had one in perfect working condition or would you wait until it was broken to invest in a new one?
The bicycle is broken and it is time to start investing in a new one. When a bike breaks down there is always initial panic and stress as possible solutions to the problem come to mind. When the panic settles down, the possibility of fixing the bike seems logical.
There is a conflict of whether or not to invest in fixing the bike. If you think that the bike will not last a long time after it is fixed, you simply would not invest. If you believe the bike will last for a while after it is fixed, you will invest.
You must trust that the market will recover and prosper in the long run in order to invest. The Dow Jones Industrial Average has clearly prospered since it opened in 1896. Although the bike has been fixed multiple times, it is still running strong.
I argue that investing in the market for the long run is what people ought to do while the market is recovering. Investing in such stocks as American Capital Agency Corporation (NASDAQ: AGNC), Verizon Communications Inc. (NYSE: VZ), and The Coca-Cola Company (NYSE: KO) with solid dividends and lower risk will allow investors to reap benefits over time.
Investing in the stock market is like riding a bike; even if you haven’t done it in a while you’ll still remember exactly how it’s done.
Fool blogger Eden Afriat does not own shares in any of the companies mentioned in this entry.