Sir John Templeton’s Rule No. 16: Do not be fearful or negative too often
Do not be fearful or negative too often. For over 100 years, optimists have ultimately succeeded in U.S. stocks. Even during difficult periods such as the 1970s, many professional money managers — and individual investors — made money, especially in smaller companies.
There will always be corrections, and occasionally even crashes. But over time, studies show that stocks tend to move up… and up… and up. With the fall of communism and the reduced threat of nuclear war, the U.S. and an increasingly united Europe may be entering one of the most promising periods in their history.
As global economies become more integrated and interdependent, and as communication becomes easier and cheaper, business activity is likely to expand. Trade and travel will grow, wealth will increase, and stock prices should rise along with it.
By the time the 21st century begins, there is at least an even chance that the Dow Jones Industrials could reach 6,000 or more. Other indexes may rise even faster. Despite current gloom about the economy or the future, more people will have more money than ever before — and much of it will be invested in stocks.
And through all of this, the essential rule for building wealth in the stock market will remain the same: Buy low, sell high.
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