Its So Much Harder Than You Think

I vividly remember six years ago today.

I lived in an apartment complex in Los Angeles. A guy who worked in the leasing office was plenty nice, but not the smartest person I had ever met (to be polite).

On March 9,2009, I overheard a conversation he was having on the phone.

"I think it's going to go to 5,000," he said. "You don't think so? I'll bet you it goes at least below 5,000."

He was making bets with a friend about how low the Dow would go.

I remember thinking to myself: This guy has no idea what he's talking about. He has no background in finance and has never invested before (we had talked about it). Yet he's making bets about how low stocks will fall. That's what the average American thinks of stocks -- something that only goes down. It's the opposite of a bubble. An elbbub!

Joseph Kennedy allegedly knew the 1920s bull market was over when he overheard a shoeshine boy giving stock tips. This was the polar opposite, I thought.

The market bottomed that day, March 9, 2009.

So what did I do? Go home and buy as much stock as I could on margin? Write articles about how this, today, was the bottom, and the start of a massive bull market?

Haha, no. Of course not.

I went home and worried. Sulked. It was a scary time in the economy.

I bought some stocks in early 2009, but not much. Not nearly as much as I should have in hindsight, of course. I was nervous. Things were so, so bad. Even watching our leasing agent make bets on how low stocks would go and thinking, "This has to be a bottom," I didn't do much about it.

In theory, everyone wants to be a brave contrarian investor, scooping up stocks as everyone else avoids them. But it is so much easier to say you'll be greedy when others are fearful than it is to actually do it.

We have enjoyed a historic six-year bull market that has pushed stocks up more than threefold. Every investor I know thinks they'll keep their cool during the next market crash, taking advantage of bargain prices as everyone else around them panics. Every single one.

By definition, most of them have to be wrong.

If you think you'll be able to make calm, rational decisions when 700,000 Americans lose their jobs every 30 days, you're wrong. If you think you can keep your cool when the global banking system is inches from insolvency, you're fooling yourself. That's the most important lesson I learned from the last crash.

This doesn't mean you'll sell during the next crash. Not all of you, at least. But not everyone can be a superhero contrarian when stocks are plunging. If you're human, it'll hurt, and it's best to have an honest assessment of your emotional fragility than to live in an ignorant bliss of who you really are. Josh Brown summed it up well with this tweet:

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Contact Morgan Housel at mhousel@fool.com. The Motley Fool has a disclosure policy.