NASDAQ over 4000 – A Lesson in Discipline

The NASDAQ edged over 4,000, but it is still a long way from its high. If you need a refresher on the NASDAQ’s range since 2000 – or an anecdote from the tech crash, read this post.

Wow. The NASDAQ just got back over 4,000. What an amazingly, incredibly bad run it has been for this index since 2000. Not to mention the fact that on an inflation adjusted basis, the NASDAQ is even further behind than the simple numbers indicate.

If this isn’t a lesson on why it is SO IMPORTANT TO STAY DISCIPLINED, I don’t know what is. Do you remember the environment in the late 1990s? A lot of investors lost their discipline. They wanted to make more money, so they piled into the NASDAQ – or even worse into concentrated positions in a few tech stocks.

I believe it is just as hard for investors to hold their discipline on the way up as it is on the way down. We often think about investors getting “scared” out of a crashing market, but just as much pain is done by investors jumping on the wrong bandwagon when everyone else seems to be making money.

It can take a lifetime to build up a sizable estate. It can take one poorly considered decision to wipe it out. It all goes back to the fact that this simplest investment strategies are the best. Diversify globally and don’t mess with it.

 

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