Why you’ll be happy being positive on the share market

It’s incredibly hard to resist our human nature of wanting to avoid danger. After all, that avoiding-danger instinct kept us from being eaten by lions, bears and crocodiles in the early days.

However, it’s not so helpful at being rational with the share market. It’s difficult to remain detached when the share market is crashing. Our desire to ‘save’ our family’s wealth will more likely lead to a destruction of potential wealth in the future.

Negative headlines are everywhere. Bad news sells sadly, it gets more views and clicks.

“The share market continues its long-term trend upwards over the past century and counting” isn’t an attention-grabbing headline. Yet, it’s the truth.

The share market keeps going up despite two world wars, many smaller wars, the Great Depression, the Cold War, the Asian Financial Crisis, the Dot Com Bust and the GFC.

There are always risks. Think of just the last few years – Islamic State, Putin, Ukraine & Crimea, North Korean threats, Brexit, Donald Trump and so on.

If we sold our shares every time a problem came along we’d never hold shares and pay a ton in brokerage.

Do you think Magellan Financial Group Ltd (ASX: MFG), Platinum Asset Management Limited (ASX: PTM) or WAM Capital Limited (ASX: WAM) sell all their shares every time there’s a global issue? Perhaps that’s one of the reasons why they’re long-term outperformers.

The share market has returned 10% per annum over the long-term including all the risks and issues that happen. The fact is that many ‘problems’ don’t have any effect at all.

If you remain optimistic about the future then you’re more likely to hold onto your shares. There will definitely be problems along the way, the high Australian household debt situation could be problematic. But who knows when that is? You could miss out on large returns. Plus, not every business is exposed to every risk.

Ultimately, I think staying positive on the share market will lead to better returns and make you a happier investor. Beating the market can simply be a case of remaining more hopeful than the people who panic and sell, or buying when prices are down.

That’s why this top growth share could be perfect to own – it is growing strongly and yet its industry is quite low-risk.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Platinum Investment Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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