『Index investing』
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Many people have probably read Nick Maggiulli’s “JUST KEEP BUYING” as it’s been featured in various media.

I think it could be considered essential reading for those considering asset protection investments like retirement funds.

The most impressive part is where he explains, with verified data, that “dollar-cost averaging into index funds outperforms even perfect market timing.”

While it’s actually impossible to perfectly time market bottoms, dollar-cost averaging into US stocks – regularly investing fixed amounts in the same securities – produces better results than even this theoretical perfect timing.

At first, I doubted this, but the reason makes sense: “because market bottoms rarely occur,” which means trading opportunities are inherently limited.

“JUST KEEP BUYING”
by Nick Maggiulli
https://a.co/d/hDH9TZR

Indeed, as of January 2025, US stocks like the S&P 500 haven’t experienced any massive drops exceeding 50% in quite a while.

While the Nikkei average just set a record for its largest drop in August 2024, this wasn’t due to a typical “shock” event. According to major newspapers’ analysis, it appears to have been a flash crash related to algorithmic trading during low market liquidity, as overall market performance in Japan wasn’t particularly poor.

Index Investing Isn’t Easy Either

However, considering such crashes can occur, index investing isn’t exactly easy – mentally speaking.

Until recently, especially in X (formerly Twitter) investment circles, this investment method was somewhat sneered at. People would say, “anyone can do that.”

While such attitudes still exist to some extent, it’s now widely recognized that it’s an excellent investment method when considering not just reproducibility and expected returns, but also mental health. I agree with this view.

However, even if it’s good for mental health, that’s only in comparison to other investment methods. It’s still a strategy that continuously exposes your capital to the market, unlike short-term trading.

This means your money will decrease when market conditions deteriorate. Sometimes this decline can continue for years. The longer you invest, the more inevitable it becomes to experience periods where your balance decreases every time you check it – daily, weekly, or monthly.

More relatable is the so-called “ohagyaa” (morning scream) – waking up to find your investment has significantly decreased. While this term is commonly used on social media when stocks drop sharply (I know it’s dated), it’s no joke when you’re the one experiencing it.

Like father, like son – investing is investing, even if it’s index investing.

In other words, it’s quite different from simple savings. While savings can change in value due to currency fluctuations and inflation/deflation, investments show increases and decreases more clearly and visibly.

How Much Can You Trust the Data

That’s what it comes down to. While this isn’t limited to index investing, it’s about how much you can bet on past patterns continuing into the future.

During a crash, people tend to think “this time is different.”

Even I got carried away during the 2020 pandemic, thinking “this is an unprecedented situation where global economic activity is stopping!” and couldn’t even make test purchases. If it was truly unprecedented, that should have been more reason to try buying.

Or on the day oil prices temporarily went negative, I had my finger on the mouse ready to click buy, but thoughts like “won’t oil value keep declining from now on? Not just due to the pandemic, but also the clean energy trend!” crossed my mind, and I couldn’t press the button.

Looking back calmly later, I realized there’s no way it would be sold for practically nothing – this is obvious when looking at historical charts.

This applies to short-term trading like day trading too. Technical traders especially believe that methods verified by past patterns will continue to work in the future.

Even when buying individual stocks for the long term, people naturally look at data like financial statements filled with numbers.

You could say investing is a game of believing in data.

Experience with Index Investing

While I’ve been doing small regular investments in BTC for several years, I’d like something besides crypto for diversification.

If I were to do other index investing, ETFs would be good. Either ARKK or something tracking the S&P 500 or Nikkei 225.

However, given the chart patterns as of January 2025, I don’t feel like starting now.

No matter how brilliantly and clearly Nick Maggiulli recommends immediate start of index investing, as someone who mainly day trades, I can’t help but see current prices as too high.

I understand the argument that current highs and lows are mere noise when looking decades ahead. I understand it intellectually, but emotionally I can’t get there.

I’m afraid of repeatedly averaging down into continuously falling prices. I absolutely want to avoid that.

…While I recommend the above book to people thinking similarly, needless to say, interpretation of the book is up to the individual, and this varies greatly depending on personal experience.

I understood it as suggesting “you should start index investing immediately, but since crashes hurt, weigh that possibility against future returns when making your decision.”

After all, investing should be done in the way that makes you most comfortable.