Shin Adachi

the world is not a zero sum game

When I used to teach computer science and shared with my students how an open-source software is born and developed, many of them would ask me, why would anyone want to start an open-source project?

Open source projects are kind of a big deal, to say the least. The React JavaScript library, the software at the very foundation of what Facebook is built on top of, was made open-source by Facebook. Google has made a similar decision with Chromium, an open-source sister of Chrome and Chrome OS.

My students’ question stems from the perception that it seems counter-intuitive for a company to share their secret sauce (the code that they developed) with the world. But they fail to see the upside of sharing and accepting contributions from engineers all over the world by turning a project open source to improve on it, and allowing creative people in all walks of life to come up unique and useful applications making use of the technology.

There is no question that Google and Facebook both have its share of brilliant engineers, but there is great power in the collective knowledge of the entire world that even the most successful companies stand to benefit from. It just takes stepping back from the myopic views (such as “me and this one rival”, or “our sales for the next quarter”), and observing the broad, long-term effects of improved software and universal access.

Do you think it’s an accident that Wikipedia today gives you much better information on most topics compared to other encyclopedias? It turns out that 7 billion prospective volunteers collectively make a much better expert than a few hundred well-paid professionals. By the same token, the quality of a software is naturally improved by allowing the world to make contributions to the code. In this technology-driven world, better software means a better world.

One key thing to recognize here is that economic rewards in this world has not been, is not, and will not be, a simple game with winners at the cost of losers. The early hunter-gatherers who would share their hunt for the goodwill of their neighbors were onto something. Today, access to information benefits everyone, even the person who was the source of that information.

A great example of that is one of Google’s early data-processing models called “MapReduce”. Google used it to index the world-wide web, which was the foundation of how Google search worked in its early days. You would think that such secret should be kept within Google, but Google saw what it could mean to share the knowledge. So they published a paper, outlining MapReduce’s inner workings.

Out of that paper, arose a project called Apache Hadoop. It is an open-source collection of data-processing software. It allowed everyone (even small startups with little money) to perform analysis of big data. This has led to the explosion of applications that make use of data in just the last ten years. We now take it for granted that weather and traffic can be predicted more accurately than ever before, your photos can automatically organize themselves based on factors like where it was taken or who is in it, everyone can get customized movie recommendations as if they’re curated by someone who knows the deep intricacies of your personality, and doctors can diagnose diseases more accurately. Data analysis even exists in surprising areas where you would not expect it. I was very surprised to learn recently that farmers can predict the best time to milk a cow simply by letting a cow wear a pedometer and letting a data-processing software analyze the output from the pedometer. With the right technology in the hands of the right people, maybe the day when we’ll be able to predict earthquakes in advance isn’t so far away.

Tomorrow at Google, we are celebrating the company’s 20th birthday. It is a celebration of the innovations of the past, as well as the future that is to come. Yet as we speak, we are in the midst of a trade-war led by some misguided people. The future that I dream of is an open one, a world in which both physical goods and knowledge flow freely across boundaries. This world is not a zero sum game.

you were born an artist

As my brother Kan likes to say, good art comes from mundane daily practice. This is an unequivocal fact. Kan is quite the artist, and most people only get the opportunity to see his final products, but there is a perk to being his brother. I got to see the practice that went into those pieces. Before any of those pieces came to be, I got to see the pile of papers on his desk on which he practiced, letter by letter and font by font, over and over and over and over again. Also, he uses the word “mundane” somewhat liberally here, because the acts of practice and continual improvement are actually far from mundane, in fact they are the most significant sources of joy for an artist. In a society so focused on results, many people misunderstand this point. They think that acting is about landing a role in a major film, painting is about having your work featured in a famous gallery, writing is about winning the Nobel prize in literature, and music is about playing to an audience at iconic venues. Of course, they are all wrong. Art is simply about showing up on a daily basis, and relentlessly pursuing to better ourselves. Everything else is just fluff.

There’s something so satisfying about practicing and getting better. Performing can be fun too, but not as much. Don’t tell anyone, but I actually don’t even like performing all that much. I do it anyway because my performances seem to give joy to some people, and I’m always happy to contribute joy to others, but after every performance I can’t help but think, “whew it’s over, now I can go home and do what I actually love, which is to practice.” As Karl Paulnack urges, we musicians must take our practice very seriously just as doctors would take their education seriously. If you’re a doctor, someday, someone will be brought into an emergency at 2AM, and it will be up to your knowledge and skill to save that person’s life. Well, if you’re a musician, it’s just as likely that some day a broken soul might walk into your concert at 8PM, and whether they go home whole again will be based purely on how well you do your craft.

Anyone who has recently pursued any form of art knows all this. However, recently, I have had several conversations with others that led me to wonder how many people have forgotten about the joy of creating art, and tragically settle for a never-ending spiral of consumption. Just consider that a friend of mine took one look at my apartment, which consists of just the bare necessities, and asked me, “Are you happy? I could not live like you, I need to enjoy life.” Societal influence is strong on this one. So many people have been led to believe that somehow there is a correlation between spending money and enjoying one’s life, and such a belief just turns people into slaves of money.

It would be one thing if people’s decision to stop creating art is a conscious one, but that is far from it. We are all born artists, and cultural influences suck the inner artists out of us. So much of this has to do with the society’s love of money. It isn’t out of randomness that I blog a lot about personal finance, although there don’t seem to be too many other pianists who blog more about finance than pianism. But I do it consciously because if you don’t control your money, your money will control you. And when it does, it makes it that much harder to have the mental energy to create good art.

I love this commencement speech by Neil Gaiman.

Creating your best art is your purpose in life. Are you getting farther from it? Then something about your life ought to change.

Kombucha is bullshit

Ok, despite the title, this post is not really about kombucha. I honestly don’t care for it that much, but if you like it, you do you. The beauty of life lies in enjoying the things that bring us joy, and if kombucha is your thing, so be it.

But this post is about something much larger and much more important, which is that I need to call bullshit on this “get results quick” school of philosophy that leads to more people resorting to stuff like kombucha, the Atkins diet (and its more recent cousins like Keto diet, Paleo diet, or any diet really), electrolyte water, penny stocks, some magical fitness machine that you can get for $99.99, or whatever else that claims to improve some aspect of you or your life with ease.

By the way, this kombucha thing is not new at all. My parents recall a time in Japan, before I was born, when it went by the name of “kocha-kinoko” and was all the craze. I point out its name because “kombucha” is actually a name of a completely different drink. Anyway, of course the Japanese eventually realized the ridiculousness of a get healthy quick scheme of the kocha-kinoko, and pretty much nobody in Japan consumes it today, and instead approach nutrition with a more balanced view. But how funny that history repeats itself many years later here in the US. That’s actually one main reason I love studying history, because often times my knowledge of history gives me the insight to observe current events and see its exact parallels in the past. I guess it shows that despite all of the advancements we have made in society, fundamentally, humans haven’t changed.

In fact I attribute much of the modern rise of eating disorders stem to this flawed philosophy of categorizing certain items as good or bad. No single food is categorically good, as we would all die if our diet consisted of that single food. Our bodies function best on a diet rich with nutrition from a variety of foods. So let’s stop pretending otherwise.

Celebrating Humanity

I am not one to pay too close attention to the news. Some of my academically-inclined friends accuse me of not trying hard enough to stay informed about the world, and while they certainly have a point, I also think that for an average guy like me, paying too much attention to the news gives me a very false view of the world because of the biases that exist in the news industry.

But I have been noticing an interesting trend about the recent Ebola outbreak in Congo which was declared over this week.

In a nutshell, the trend is this:

Humans have dealt with this recent outbreak so-freaking-amazingly well compared to the previous Ebola outbreak (2014-2016) in West Africa.
News coverage of the topic was way down compared to the 2014 outbreak.

That’s not surprising given that news tend to have a negative bias, but can we all take a moment to celebrate the human progress?

The death toll of the previous outbreak was over 11,000 people. This time it was less than 30. Stuff like that don’t happen by chance or luck. Our progress is a result of collaboration between societies and organizations. We have dealt with ebola because we have the knowledge and technology to do so, and we have made it a priority to do so, from governments funding and expediting the ebola vaccine research and clinical trials, to reacting quickly to visit even the most remote of villages to administer the virus on first sign of an outbreak.

Of course, fighting the ebola virus isn’t the only area in which we have made a significant improvement.

Extreme poverty in the world (measured by income adjusted for inflation) has diminished to a half of what it was 20 years ago. It’s hard to notice this for those of us who live in the United States, because $2/day and $4/day both seem like extreme poverty to us, but this is a significant improvement in the quality of lives of people all over the world.

Casualties from war and battles have declined dramatically. During the World War II, the death toll was over 200 per every 100,000 people. That number is just 1 today, a whopping 99.5% decline.

Less children are working. Crime is decreasing. More girls are getting educated. Less people are enslaved. Nuclear weapons are getting disarmed. Deaths from natural disaster is declining. Planes are crashing less. We are harvesting more food per area of farmland. Share of people living in an elected democracy is increasing. More kids are getting immunized. Literacy rate is as high as it ever was.

Does that mean that we’ve solved every problem? No. But are we on the right track? Absolutely. I cringe when my pastor would make a commentary on something he saw on the news and say something like “in times like these, we need the love of Jesus more than ever.”

Precisely what does he mean when he says “in times like these?” The data is overwhelming. Now is the best time we have ever lived in, and it will be even better tomorrow. Humans collectively have realized the power to solve problems that were impossible to solve in the past. With that same power also comes the power to destruct just the same, but that is not the direction we have decided to move in. Data does not lie. Together, we’ve chosen to improve the world. That gives me hope.

On monopolies and antitrust laws

“Amazon is getting too big, it’s like a monopoly. I’m scared that they are going to take over the world. Other sellers cannot compete with them, and that’s not good.”

That was a concern my friend expressed recently. I was reminded of it again today, because the authorities of the European Union apparently have the same misunderstanding of what constitutes a monopoly. Today, the E.U. announced a fine on Google worth over $5 billion, claiming that Google’s partnerships with hardware makers such as Samsung, Huawei, and HTC to make Google’s applications the default services on the devices are in violation of antitrust laws.

Simply put, this ruling is not warranted. (Disclaimer: any views I express here are my own, and they are not of my employer, Google. For that, refer to their official blog.)

Antitrust laws exist for a simple reason: to prevent a monopoly from taking advantage of its status to remove competition from the market. Here’s a couple of examples of what might constitute a violation of antitrust laws:

If my local cable company works out a deal with the politicians to make it illegal for other competitors to enter the market, then promptly jacks up the price of its services.
If Google and Apple were to secretly agree that instead of competing to offer good products at good prices to the consumers, they would both jack up their respective phone prices (iPhone and Pixel) to some ridiculous amount.

Honestly, either of the above wouldn’t bother me at all because we’ll all be just fine without cable TV or smart phones, but still, I can see that such actions could be considered a violation of antitrust laws.

Now, let’s be clear about one thing. There is a big difference between a company who gets big because it has removed competition through corruption and has broken antitrust laws, and a company who gets big because the services and the products that they provide are so valuable to the consumers that so many of them choose to use it. So which is the case for Amazon and Google?

The reason Amazon is big is NOT because they are evil and they are taking advantage of all of us. Amazon is big because everybody chooses to use Amazon, which in turn makes them profitable. Why do we all choose to use it? Is Amazon our only choice? No, of course not. We can all stop using it any day, if we wanted to. But we don’t want to. We use Amazon because they offer better prices on many goods compared to their competitors, and that is a good thing for the consumers. That is far from a monopoly taking advantage of its status to jack up prices that it puzzles me why people confuse the difference. It might suck for a store owner about to go out of business due to increased competition, but the whole point of antitrust laws is to encourage this kind of competition, not to stop it. If that store owner were to argue he is going out of business and therefore Amazon must be harming the economy, he would be wrong. It is actually good for the economy for a company who does the job more efficiently to get more of the business, incentivizing businesses who don’t do it as well to step up their game and do it better. If they fail at that, they’ll go out of business as they should in a healthy economy, and hopefully they’ll go on to do something else with their time and resources to benefit the society in another way. Fallacies in economic thinking often comes from only thinking about a negative aspect of a small part of the economy (in this case, the store owners), so let’s make sure that we don’t forget about the positive aspects on the rest of the economy, which in this case obviously includes the consumers, but also the manufacturers whose customer-base has suddenly expanded to the entire world thanks to Amazon.

When it comes to Google and the Android platform, again, it would be wrong to say that they have taken advantage of their position to the detriment of the consumers. First of all, they have not at all removed the competition, and they aren’t trying to. Android is an open platform precisely because Google’s mission is to make the world’s data accessible to anyone and everyone. There are so many choices when it comes to Android devices, from over a thousand manufacturers. The competition in this market is alive and well, and there are many affordable options for the consumers because of it. Some of the manufacturers may have agreed to a contract with Google to pre-install Google’s apps, but it’s not as if they were forced to do so. If they thought that Google’s apps were bad and it would’ve been better to install other apps instead in order to sell more of their devices, they would have. Why didn’t they? Their choice. Customers also don’t have to use these manufacturers’ devices. So why do they? Again, their choice. And I didn’t even mention the competition from non-Android (which basically means iOS) devices, which is also a very healthy competition, so really nobody needs to use an Android device if they all choose to use iOS. Why don’t they all switch to iOS? Again, their choice. (Starting to see a pattern here?) All this competition is good for the consumer, and plenty of choices exist as we speak. There’s nothing confusing here, and I can’t put it any simpler. Despite the competition, customers are still choosing to use Google’s applications because of their high quality. These apps provide them with something valuable. When’s the last time Google Maps helped you navigate and avoid a traffic jam? It happens all the time for me. And recently at a sushi restaurant in Tokyo, I saw a Korean girl use Google Translate to figure out how to say her favorite fish, then proceeded to put in her order in Japanese.

My coworker told me about a time he witnessed a family at an airport attending a sick child, and a nurse happened to be nearby to help. They didn’t speak the same language, so they used Google Translate to communicate. Were they forced to use it? No, they chose to because it was useful and it provided them with something they needed.

Me llamo Shin. Soy músico.

During a recent conversational class, I learned to introduce myself in Spanish.

“Me llamo Shin. Soy músico.” (My name is Shin. I am a musician.)

This got me curious, because any English speaker would be tempted to say “Soy un músico” instead, but apparently, it’s not quite correct to add the article when speaking about my profession.

So during a 15-minute break with my band in between our shows, I asked my Spanish-speaking bandmate why he thinks this is so. His answer was so beautiful that I have to share with you:

“When you say ‘I am a musician’, you are just that, one musician. But you see, you are not just a musician. So you say ‘Soy músico. I am musician.‘ When I tell you ‘I am musician’, I’m heroically professing that I embody music. All musicians are within me, and I am within all musicians.”

I’m pretty sure he just made that explanation up, but nonetheless, I was inspired by how romantically he thinks about his language.

choose the difficult road

During a recent music gig, a girl who looked to be a teenager came up to me and asked, “is it hard to become a musician?”

At that moment, I could have simply answered the question and tell her that yes, it is probably difficult and requires much more work to be a musician than most other jobs, but I wondered about why she was asking the question in the first place, so I asked her, “what would you do if I told you that it was difficult?”

After a short conversation, I found out that she loves to play the guitar, and her parents think that making a living as a musician is difficult, so she should pursue other things instead.

I see two main beliefs that drive this kind of thinking.

You should not pursue something if it is difficult.
Pursuing one career takes away an opportunity to pick up another down the road.

The only problem I see here is that both points above are completely wrong.

Often, it is very tempting to take the easy road. In fact, a lot of what we do on a daily basis is driven by how much short-term reward we can get for doing as little work as possible. For example, many people (including me) like to get drunk for the good feelings we get in return, however temporary they may be. We also like to satisfy our hunger by consuming junk food. And we attempt to garner “likes” on social media by posting an over-dramatic representation of some status update based at least in part on our lives showing off how great our lives are, or taking pictures of food that we didn’t even make ourselves, as if we somehow deserve the credit for the culinary art.

All these things give us instant gratification, but they make us worse off in the long run. They make us feel good just in that moment, but that feeling does not persist, and we even pay a price afterward. In the case of alcohol and junk food, the price is obviously our degrading health. In the case of posting things on social media, our price is the empty feeling we feel on the inside from desiring so badly for social approval while doing nothing of value to others.

It turns out that the things that are truly worth doing, like the things that change the world for the better and the things give us a sense of purpose, are all difficult things. So even though we all succumb at times to the desire to pursue the easy road, we must not give up completely by making that our default action. Whenever we come across a juncture (which is pretty much every single day), we must intentionally choose the difficult path that takes more work but also leads to more growth.

And as for the second point, no, we do not necessarily diminish our chance at one career by pursuing another, and sometimes, we even gain more, as our philosophy slowly builds to help compound our overall growth which opens up more opportunities. Besides, with the current pace of societal changes, there isn’t a single job that exist today that is guaranteed to exist twenty years from now anyway, so we might as well embrace the changes and take joy in all the learning that we must do continually. It is even becoming the norm for people to pursue multiple careers throughout their lifetime. Personally, I know that I have lost nothing by pursuing music. In fact, music taught me some of the most important lessons that allowed me the chance to develop my skills in other areas. Music helped me internalize that the only way to get better is to work to get better. It turns out that this applies in any other field. So just by knowing that and letting that conviction be the guide for daily action, you will have a leg up on anyone who believes that there is some magical shortcut in life to achieve more with less effort. There isn’t.

Just show up

I happen to live and work by the gym where Kobe Bryant works out. He works out quite early, and today he showed up at 5:45AM for his morning workout. My coworkers tell me that this is nothing unusual for Kobe, and he’s been doing it since his high school days. Mind you, he is a retired player, but hey, Kobe is still Kobe, and I think the fact that he still shows up in the morning to this day says a lot about his attitude and philosophy toward life in general, not just basketball. Now I feel like a coward lecturing to my students about the importance of work ethic, when my daily practice sessions don’t start until much later in the morning (if it starts at all). Apparently, I still have a whole lot I must learn from truly dedicated people like Kobe. He makes me look like the laziest person on the planet, and that’s probably why he makes millions and I don’t.

By the way, here’s a little nugget of insight I’ve discovered over time, for anyone who thinks that practicing is too hard and unpleasant; practicing is actually not hard at all. What’s really difficult is to do the Step Zero, which is to show up for practice. Or in my case, to sit myself down in front of the piano. Once I can overcome that initial step, the actual process of going through the practice is not as difficult.

New York City

When I stepped foot in New York City, I felt a strange sense of familiarity. Here I was, in a city that I had never been in, yet it seemed as if the scenery in front of me was something I had seen before. I even felt like I had come home.

It could be because New York City is similar to my hometown in many ways. Just like Tokyo, you encounter thousands of pedestrians on a daily basis. Many of them seem to be in a rush to get somewhere. They are “strangers” to you, as in they are people whose only connection to your life is that they once walked by you in a busy city street. If your life were a movie, they are part of the “extra”. But let us remind ourselves that in their lives, we are the extra. Just strangers walking by. Most will stay strangers, yet, should you get to know some of them through a stroke of life’s luck that bring you together, you quickly find out that you were not strangers at all. After all, we are all human, and as such, we share much in common. We all seek meaningful relationships, we strive to do the best given our life’s circumstances, we worry about our future, and we ponder about things like the meaning of life and our place in society.

I wrote this piece, “New York City” for my album “Portraits”. The album is called that because these are pieces that portray some aspects of my life that have meant a lot to me.

You can listen to the rest of the album on Spotify and iTunes.

the fear of investing

Many people tell me that when it comes to investing aggressively, fear often gets in the way. But when I talk to them, I quickly find out that their fear is based on their emotions, and just by having more information, they can get over their fears and start investing wisely. Too often, our fears are unwarranted and we don’t even know it.

For example, here are some comments I’ve heard from my friends just in the recent months:

“Other than my real estate properties, I hold a lot of my assets in cash. I just can’t go into the stock market, I’m scared that it is way too overpriced.”

“I just sold all of my stocks recently. I’m glad I did it because the stock market hasn’t gone up at all this year.”

“It took 25 years after the Great Depression for the market to recover. I can’t risk an event like that happening again. I can’t afford to wait 25 years to get my money back.” (This is not true by the way, it doesn’t take 25 years to recover, as I’ll argue in this post.)

All of these fears are understandable. Just the potential of losing money is scary, and I actually used to have the same fear before I studied about this topic more and have come to the understanding that my fear was purely based on the lack of my knowledge.

Having said that, there are a few things that you must understand when investing for the long-term.

You will lose money in some years.
The stock market does not always go up. So if you’re invested in the stock market, you will lose money in some years. I lost close to 40% of my assets in 2008. And guess what? That’s totally okay! You’re actually in good company when you lose money, because even Warren Buffett, the world’s best investor, loses money in those years too. Which leads me to my next point:

You will gain money in most years.
And these years are quite profitable. Way more than enough to make up for the lost years in my first point.

You cannot predict which year will be which.
This is really important. You cannot predict the market. That doesn’t mean the market is completely random. There actually are ways to evaluate whether the market maybe over or under-priced, and one good way is to calculate the price-to-earning (P/E) ratio of a broad stock market index and compare it to the historical average. But even with that information, you still can’t predict what the market will do that year. Take 2017 as an example. It seemed that the market was overpriced at the start of the year. Seeing that the market is overpriced, an investor could have sold all his stocks predicting that it will go down (sadly, some people actually did). Well guess what? By the end of the year, the market gained a whopping 21.7%!

It’s costly to be NOT invested in the market.
It is tempting to sell your stocks when the market seems overpriced. But when you sell your stocks, you miss out on the potential growth, and history has shown that the market tends to have just a few days every year when the most significant growth occurs (we’re talking multiple percentage points in a single day). The only problem is, nobody can predict when those days will come. So how costly is it when you miss out on the few good days? Consider this fun thought-experiment:

Suppose you had $100,000 on January 1st of 1994, and decided to invest all that money for two decades, ending on December 31st of 2013. That’s a total of 5037 trading days. If you kept all of the asset in an S&P 500 index fund for all of those trading days, you will have a hefty $583,520 sitting in your account at the end of the experiment. Cool! You survived the dot-com crash of 2001 and the housing-crash and financial melt down of 2008 just fine, and you can now retire comfortably on your money. Readers in Los Angeles or New York might disagree and argue that they need a few million dollars to retire, but remember, the reason why people seek to live in these expensive cities in the first place is because of the wealth of economic opportunities close to a center of commerce. But if you are financially free, the prospect of a well-paying job doesn’t factor into your decision anymore. You can pretty much live anywhere in the world at that point.

Now, to continue with the thought experiment, consider this alternative: Suppose that instead of investing your money for the entirety of the 20-year duration, you took your money in and out of the market due to fear, and you happen to miss out on forty of the best trading days during the 5037 trading days span (that’s less than just 1% of the duration). Guess how much you’d have at the end. A mere $81,490. Remember, you started with $100k. You actually LOST money over those twenty years, simply by missing out on those forty days of trading. It turns out that fear could be very costly.

When it comes to making a financial decision, you are much better off going with what the research says, not what your emotion tells you to do. And the research says that the people who stay invested see much better returns than people who try to time the market. So stay invested at all times.

Count your wealth by how much of the economy you own, not dollars.
Money is just a piece of paper. Although it is a pretty useful piece of paper for trading goods, there is no inherent value in it. But so many people think that there is. I even know of an extreme case of a family who holds most of their assets in cash hidden in various places of their house. They do things like that because they think that money is valuable. It is not. When you hold onto cash, you are actually constantly losing wealth over time, because the purchasing power of a dollar diminishes over time. Economists call this “inflation”. Just think about it. A person could buy a hamburger for 12 cents in 1950. Well, that’s not true anymore, in fact you can’t buy much of anything for 12 cents nowadays. So by keeping 12 cents under your bed thinking that you could treat yourself to a nice juicy burger in some future date, you lost all your purchasing power. That’s essentially what happens when you just keep cash. Money loses value over time.

But it is so tempting to compare prices simply in terms of dollars. I’ve met some old people who talk about the “good old days” when everything used to cost cents. Well they forgot one important factor: their wages were much lower then too, and their purchasing power was actually lower in those “good old days”. Most of them couldn’t afford a color TV, for example.

It’s also the same misunderstanding that causes people to think that they got a raise when their salary goes up, because they simply look at their wealth in terms of dollars. If your salary goes up by 1% every year, you are not getting a raise. In fact, your income went down, because inflation raises the consumer price index by more than 1% per year.

When you think that your wealth is measured in dollars, it makes sense that you would have an aversion to loss by investing in the stock market. After all, your $100 today could suddenly drop to $60 tomorrow, and it appears that you “lost” your wealth. But that’s not how I think of it. I count my wealth in terms of the proportion of the world’s economy that I own, because essentially, that’s what I am buying when I invest in index funds. Suddenly, the ups and downs of the market don’t affect my emotions anymore, because even if the market crashes tomorrow, I still hold the exact same percentage of the economy. So my wealth hasn’t really decreased, first, because prices of goods also drop with the market keeping my purchasing power relatively stable, and second, now those shares are at a steep discount! If the market crashes and loses half its value, I can afford to buy double the shares for the same amount of dollars all of a sudden! So the market crash is not bad at all. In fact, it’s a great opportunity for me to keep investing.

When you invest consistently, you naturally end up buying more shares when they are discounted due to downturns, and that leads to a significant wealth over time. Market downturns are actually to your advantage.

It won’t take 25 years to recover from a crash.
This is partially related to my last point. If you simply look at it in terms of dollars, it does appear that the recovery from Great Depression took 25 years. But you know by now that your wealth is not to be counted in dollars. Remember, this was a deflationary period when the prices also went down, so if you just look at purchasing power alone, it turns out that the recovery only took 4.5 years, not 25. Plus, this person was assuming that he invested ALL of his assets right before the market crashed, and didn’t invest a single dollar after it crashed. But that’s not what you’d be doing if you’ve been reading my posts. You will likely start investing way before the market crashes and see significant growth in your funds that makes the loss of a crash not hurt as much. And even if you do get unlucky and invest a significant amount of money right before a crash, as long as you keep investing after the crash, you will still be in golden shape.

So there you have it. Hopefully now you have a better understanding of the market, and are not that afraid to invest. There’s no telling when the next crash is. It might happen tomorrow. It might happen in 20 years. It doesn’t matter. Just keep investing.