Most savvy investors, whether they work on Wall Street, in an air traffic control center in Oklahoma or an IRS office in Austin, know a sure way to make money in the stock market is to buy low and sell high. That’s the easy part.
One advocate of the buy-and-hold approach is Abraham Grungold. He’s a full-time fed and part-time financial coach. He’s done very, very well practicing what he preaches. He’s a card-carrying member of the Thrift Savings Plan Millionaires Club. So how did he do it? Simple on paper, but during tough times, like these, it takes nerves of steel to ride out all the bad news. They do. The problem for most is they don’t know when it’s high or low. People need to be right twice. And that rarely happens! Getting out of the stock market is emotionally easier than actually going back.
So how has this self-made millionaire been doing during the pandemic? What’s the strategy?
Since 2000, investors have been fearful of every blip on the economic horizon. They panicked during the Dot Com crisis, the financial crisis of 2008-2009, Brexit, and now the COVID-19 pandemic. Each time federal employees have scrambled to move their Thrift Saving Plan investments to the government-backed securities G fund. Subsequently, I would hear from co-workers and friends that they lost money by transferring to the G fund. When they lost money, it was due to the drop in the market and by selling their shares they ended up with a recognized loss.
Financial markets have ups and downs just like a rollercoaster. The ride can be scary but also exhilarating. Once every financial crisis has ended, the market has surged to higher levels than before the crisis. Some people love the rollercoaster ride and ride it repeatedly. These investors have become TSP millionaires.
The 2020 pandemic has had the same outcome. In February 2020, I heard about the pandemic worsening and I was planning to move my TSP investments into the G fund, but I decided against it. One year later, my TSP has grown 25% more than it was in February 2020. Now, some financial experts are saying that 2021 will become a bull market once the nation receives their vaccinations. While other financial experts say that the year will become a bear market, because the markets have been over purchased and that there will be a pullback in valuations. If there is any pull back that will be a buying opportunity for me, I will tell my clients to be ready to do some buying as well as enjoy one more ride on the rollercoaster.
There’s no such thing as “pear cider”. “Cider” is an alcoholic beverage made from fermented apples only. An alcoholic beverage made from pears is known as “perry.” The drink was popular in England for centuries but fell out of favor during the second half of the twentieth century. That turned around in the 1990s when the drink was rebranded as pear cider.