There's a lot of uncertainty right now.

Inflation.

Bear markets.

Interest rates.

China-Taiwan.

Russia-Ukraine.

European energy prices.

Australian house prices.

And this is just what's hit the headlines in 2022!

Yet for all of these scary headlines, I think there are even more reasons to be actively considering investing for the long run.

"Remember: things can be bad, and getting better." - Dr Hans Rosling, Author of Factfulness

Let's take a look at the reasons why we get it wrong, and what we should focus on...

https://www.youtube.com/watch?v=3EQhlekvn6U

One of the key points I covered in a recent Selfwealth Live show is that the stock market is forward-looking.What this means is, the stock prices you see in your Selfwealth account today are a reflection of what investors expect the future to hold. For example, if you just found out that Telstra Corp (ASX: TLS) would lose, say, 2 million mobile customers next year, would the company be worth more or less than yesterday?

(The answer: less.)

While some investors can grasp this idea in its fullness, I'd say most investors are deeply influenced by what's happened in the recent past to predict future outcomes.This is known as recency bias. And it deeply affects professional analysts, to the point where I think most of their price targets/valuations on stocks are just about useless.

For example, in the depths of a bear market, investors will think 'things are bad right now, so I can't possibly expect this company is going to grow its sales 20% next year -- that's unrealistic!'

I think a reason analysts and portfolio managers can hung out by this bias is that they're forced to think short term.

As they say, a better career is often made by failing conventionally than succeeding unconventionally.

Of course, some historical numbers and macroeconomic factors (like inflation) are worth studying, especially during a downturn.

For example, with hundreds of thousands of investors entering the stock market since Covid, many of them would be better off if they learned about prior market crashes or bear markets.

Why does the Stock Market go Up?

Another thing that's worth remembering during a downturn is the long-term return expectations of the stock market, over full market cycles.

Using data on the US stock market going back to 1871 I showed that the average yearly increase in company profits is between 6% and 7%.

This type of growth won't be evident each and every year, of course. And nor will the same companies survive indefinitely.

But over the ultra-long term, I believe companies will continue solving bigger problems and create more value for society -- and that value creation will result in profits ratcheting up over time.

But if you think about it logically, by trying to take the emotion out of it, share prices are down (which is good for buyers like me) and the long-run expectations haven't changed.

Given my time horizon for investing for 10-20+ years, therefore, it made sense that I would want to buy shares/ETFs in the past week.

It might not suit everyone (e.g. if you plan to retire within the next 5 years, or don't have a high risk tolerance). But it suits me.

A Teaser of What I Bought

While The Rask Group's trading rules prevented me from disclosing what I had invested in during last week's Selfwealth Live show, I can say that one of the riskier things I invested in, with a smaller amount of the money, is the Fidelity Emerging Markets Fund (ASX: FEMX). This fund is not an ETF, but it can be bought and sold just like an ETF inside your brokerage account.

FEMX is actively managed by Fidelity and invests in Emerging Markets (like China, Korea, India, etc.) and, therefore, is definitely at the riskier end of global markets.

FEMX is one of the funds I identified in last fortnight's Selfwealth Live, Where I would Invest $50,000 (Starting Today). I highly encourage you to read that article and watch the live show.

Disclaimer: This article contains general financial advice only. It is not personal financial advice as it does not take into account your needs, goals or objectives. So please speak with a financial adviser before acting on this information.

The Rask Group, Owen's company, owns units in the Fidelity Emerging Markets Fund (ASX: FEMX).