Ask any great investor — Buffett, Graham, Swenson — and they will say that dollar cost investing, where you take all your savings at the end of the month and put it in S&P 500 irrespective of what the market is doing, is the best investment strategy.
But this is incredibly hard to do. Why? Because Spinoza, says Graham. People freak out when the market tanks (see Here).
Why do people freak out?
To understand this, you need to think of human history in terms of my favorite movie Alien vs Predator (remember Chris Rock’s Oscar interview in south central LA?), where humans are caught between two powerful warring entities. In real life, the two entities are closeted LGBT fighting to crush the out LGBT (think of the acts of Zhou Enlai, G. Harold Carswell, Dennis Hastert, e.g.,). Of the many LGBT heroes, Kolmogoroff, Turing, etc., none comes close to Deirdre Mccloskey. She taught me how to think about capitalism in a deep philosophical manner.
Most lovers and haters of capitalism, I realized, begin by first caricaturing it. Only Deirdre has seen it correctly (tech alpha male Peter Theil has openly mused whether being an out LGBT gives one superior clarity into human affairs; and the only cause Jeff Bezos has given to is LGBT. Most of the hedge fund financiers of the GOP are LGBT donors; they have even extracted LGBT safety oaths from the likes of Ted Cruz ). Whatever the reason, Deirdre has nailed capitalism. Read her website.
Once you have philosophically understood capitalism, a very hard thing to do, the gyrations of the markets become leaves in the wind. You realize that the day capitalism truly falls, you are dead anyway. (If you don’t get what dead means in this context, you haven’t gotten Deirdre or dollar cost averaging).
Spinoza says that freedom is being immune to gyrations. But that freedom is hard won. Ask Deirdre!