Yes, 2018 was not a good year for Canadians nor for US investors.

The S&P 500 lost 6.30%

The Canadian index lost 12.60%

The international index lost -9.71

The total return for the year 2018 was -9.54%

If you are a short-term investor, this is the kind of news that would scare you away.

But throughout history, the stock market has been the best way to invest someone’s money.

If we look at the last 10 years, we can easily see that the stock market had its ups and down’s but generally it mostly goes up.

Here is the same S&P 500 index seen from a 10-year chart. As you can see the decline of the last year is small and the total return for the past 10 years is 171%.

Here is a graph of the Canadian Market for the same time period. Here the return for 10 years is 61%. Not as good as the US, but it’s still a good rate of return.

If we can accept that the market is volatile, then we can play it. If we are willing to think of a time horizon of 10 years or more, then you will be a winner.

Yet, most people lose money. The major reason is that they lack the long-term historical perspective, they get caught up in the short-term events going on at the moment. They watch the news and overreact to minor or even major news events. If we see any long-term graph of the stock market, we will see many fluctuations in the stock prices, but as long as businesses are in the business of making profits, the stock market will continue to go higher.

Here are some tips to help you NOT to lose money

1. Buy Index funds or ETF

This is the one technique where you don’t have to worry about the fund manager’s human emotions. If you have an actively managed fund, your fund manager might panic, or react in a way that can hurt the investments, remember actively managed funds are run by humans with human emotions. With Index funds or ETFs, you know that there are no human emotions in the day-to-day running of the fund.

2. Don’t buy on margin

It may be tempting or seductive to make money with other people’s money. But it places you in a corner. Your level of nervousness goes up and you might not be able to handle the volatility when the stock market is going down.

3. Don’t time the market

If you buy stocks, buy them when you have the money. If you sell stocks, sell them when you need the money. Everything else, constantly getting in and out, in the long run, ends up hurting you. Market timer, on average, grossly underperform their market benchmark.

How are you dealing with the ups and downs of the market?

please write your comments below. Happy 2019.

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