Vaishnava Financial Independence

Krishna Devotees of Srila Prabhupada Transcend ISKCON

Self-Reliance and Self-Sufficiency

Intra-Year Volatility: Vaishnava Stock Market, Investing, Finance Series

Chand Prasad, Ph.D.

key words: ISKCON, Srila Prabhupada

Financial markets are never a source of easy money, despite the fact that stocks rise in most years. Sizable stock losses over a few days or months, i.e. intra-year declines, may lead investors to anticipate that the market will experience a prolonged, multiyear downturn. More often than not, these fears are unfounded. The stock market has historically experienced a significant pullback at some point during most years while still delivering positive returns over the full year—2020 is the latest such example.

However, Vaishnava Financial Independence is not a purveyor of blind optimism. Stocks fluctuate wildly around an upward trend, with substantial losses in some years. These negative years often lead investors to worry the financial system is fundamentally broken, and that equities are no longer a worthwhile investment. These fears have been proven wrong, time and again.

Unfortunately, most investors do vastly worse than simple indexes like the Dow Jones Industrial Average or the S&P 500 because they waver in the face of volatility and abandon the stock market at the wrong time. Rather than moving into and out of equities, which almost guarantees poor returns, a superior approach for a highly conservative retired investor is to rely on an emergency reserve fund when stocks plunge. For risk-averse retirees, a reasonable investment policy entails setting aside enough money to pay for 4 years of future living expenses in high-quality, short-term bonds, while allocating the rest of the portfolio to stocks.

Please read the full article: Intra-Year Volatility: Vaishnava Stock Market, Investing, Finance Series