From Morgan Housel: Why some investors must fail. There is an unbreakable rule of financial markets: some investors must fail. No amount of technology or education will change this, for two reasons — the first is that stocks are volatile. They have to be. If there were no booms and busts, wild bubbles, no unexplained sell-offs, and stocks drifted ever upward, everyone would put all their money into stocks. Why wouldn’t they? If there’s no downside and stocks offer higher returns than cash or bonds, they’d be crazy to not put every cent in stocks. As soon as that happened, prices would rise and stocks would get extremely expensive. And once that happens, history shows, volatility isn’t far behind. The second point comes with understanding what volatility is. Pundits often say, "people sell stocks when they’re low". But it’s the other way around. Stocks fall because people sell them. People get scared out of stocks, sell and drive down prices. Which means that, as long as there are fe...
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