Just like Life, Investing is like a Teeter-Totter
I remember as a child my friends and I would spend time occasionally at the local park on a teeter-totter, obviously not using it as it was designed but trying to knock one another off to claim victory. This game was like the king of the mountain. The winner was usually the one with the best balance and tactical foresight that day. I have doctored my share of lumps from these beasts. Teeter-totters were more fun than the simple seesaws because they not only went up and down vertically, but they also went horizontally. It was much easier on a teeter-totter to catch your foe off guard and force him to lose his balance. These recreational contraptions are a rare find at your local park today because safety advocates have sought to ban them because of possible accidents. REALLY! Sometimes the simple things in life make the best analogies.
The stock market invariably goes up and down in value, but sometimes, it also goes sideways, much like the old teeter-totters. What many people do not understand about the stock market is that money is not made in the up position but on the rise and fall of the market or the sideways movement, just like a teeter-totter. In down markets, it is easier to find deals below market value. If you are using a systematic investing program, these below-market deals take advantage of dollar-cost averaging as the overall market falls in price. If the market is going up, you witness an increase in value and dividends, which reinvested, can significantly increase the growth of your investment portfolio. In a sideways market, you maintain the same stock values but can continually add to your portfolio investments by just holding your position.
The stock market is not a place to invest hoping to capitalize on short-term movements in the marketplace. Most people get in trouble trying to time the market. The stock market is a long-term investment program. We often forget what the Bible tells us in Proverbs 13:11.
“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” (Proverbs 13:11 ESV)
Austin Pryor, along with Mark Miller, in their book Sound Mind Investing Handbook, believe we must put specific strategies in place to prevent getting off focus with your investment plan. The authors describe setting boundaries to keep you on course with your investment objectives. These boundaries include using mechanical guidelines instead of your intuition and judgment like risk analysis profiles and adhering to your season of life, building a broadly diversified investment portfolio to protect against volatile market risk, developing a long-term get rich slowly approach, and accepting responsibility for your decisions and seek counsel when appropriate (Pryor & Biller 2021). These boundaries make up the foundation of your investment program.
It is only when we accept the worldly view of life that we fall short of God’s glory. God has graciously provided us with his playbook to live by, but the world often entangles us, and we lose track of our inheritance in Heaven. I urge you to set your life on a firm foundation and follow the path God has laid before you, including your investment program. I miss the old teeter-totters.
Crossway Bibles. (2007). The holy bible ESV: English standard version: Containing the old and new testaments.
Pryor, A., & Biller, M. (2021). The sound mind investing handbook: A step-by-step guide to managing your money from a biblical perspective. Moody Publishers.