Tony Robbins, renown life and business strategist who has coached more than 50 million people, has dedicated himself to spreading personal finance literacy across America. And his mantra is timely: Don’t sit on the sidelines in fear or make rash decisions because of stock market volatility. As he points out: “The single biggest threat to your financial well-being is your own brain.”
Translated, that means we all have biases and fears that we need to shake — from the aversion to losing money to investing overseas. As he notes in his book “Unshakeable: Your Financial Freedom Playbook,” you need to have “a state of mind that will help you have unwavering confidence even amidst the storm.”
That is especially true in today’s volatile stock market environment. To be sure, 2018 was the most volatile year since 2015, measured by intraday moves of 1 percent or more. That year, the S&P 500 recorded 72 intraday such moves. This year has seen 64 through Friday. That compares with 48 in 2016 and just eight in 2017. The month of December was the worst final month of the year since the Great Depression, with a loss of nearly 10 percent.
According to Robbins, during big swings in the market, it’s wise not to make emotional decisions. To be successful, the best bet is to follow Warren Buffett’s golden rule and have a long-term horizon to capture a compounding effect that others who quit lose out on. This strategy means your asset allocation, cash flow and mindset are designed to deal with short-term risks.
“There will always be booms and busts. You cannot really time the market. It doesn’t work 99 percent of the time,” Robbins says. To prove his point, he notes that the average return in the S&P over the last 20 years was 8.6 percent. But if you were out of the market for just 10 of the best trading days during the period, your returns would have been only 2.5 percent.
Robbins’ advice has been gleaned from his interviews and work with some of the greatest financial minds of our generation — from Jack Bogle, founder of Vanguard Group, and Ray Dalio, founder and co-CIO of Bridgewater Associates, to Warren Buffett, founder, CEO and chairman of Berkshire Hathaway.
As he explains, these money mistakes can derail individual investors’ wealth strategies.
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