Why does a rising stock market depress me?

One of our investment club’s stocks is up nearly 10% in two days. Recently, another one of our stocks rose 4.3% in one day alone.

And only one of our stock holdings is currently priced less than what we paid for it.  Does this make me happy?  Absolutely not.

Contrary to what you might think, rising stock prices (and especially a rising stock market in general) really bum me out.


I’m a net purchaser of stocks.  The stock market doesn’t float up and down, long term, without making tremendous net gains.  If a family member had been able to invest $1 in the U.S. stock market in 1801, while reinvesting their dividends, it would be worth more than $5 million today.

There have been plenty of historical times when the markets plummeted.  There have been plenty of historical times when the markets soared.  But which do you think were the best times to be plowing in money most enthusiastically—when the markets were getting cheaper or when they were getting more expensive?

Warren Buffett says that most investors answer this question incorrectly.  He likens the stock market to the hamburgers he regularly dines on:

“If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?  Many investors get this one wrong.  Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.  In effect, they rejoice because the prices have risen for the ‘hamburgers’ they will soon be buying.  This reaction makes no sense” (Warren Buffett, 1988 Berkshire Hathaway annual report)

Most of the members in my investment club are net purchasers, and the equities in the investment club also reflect the holdings in my personal retirement account.  So I’m elated when our stock prices fall, and disappointed when our stock prices rally.

If you’re a retiree, or someone very close to retirement, then you’ll understandably prefer a rising stock market because you’ll soon be– or currently are– a seller of stocks, not a buyer.

But on a selfish level, I’m hoping that the stock markets cease their recent rise while returning to the mouth watering levels we saw in March.  I also hope that my current holdings plummet in value—so I can greedily load up on more.

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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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