Investing involves risk. We all know that, but it doesn’t make it any easier to bear the endless supply of distressing headlines. Between skyrocketing inflation, bank closures, and a few years of market turmoil, it’s been difficult for most investors to sit still and watch it unfold. But, as money maven Warren Buffet has preached, “I would tell [investors], don’t watch the market closely.” Why?
For most investors, reacting to market downswings is likely to backfire. Assuming you have a properly diversified portfolio, it’s generally best to look the other way and wait it out. Similarly to Buffet, Jack Bogle (late business magnate and founder of Vanguard Group) recommended a stay-put strategy: “Stay the course. Don’t let these changes in the market, even the big ones… change your mind and never, never, never be in or out of the market. Always be in at a certain level.”
This attached flyer from Putnam, Markets Recover from Crises, illustrates what they both meant. It shows a captivating graph that looks back more than 80 years and demonstrates the markets’ incredible resiliency and ability to rebound from a decline.
Of course, past performance never guarantees future results. But based on historical data, there is undoubtedly good reason for staying the course; if you’re on the sidelines during the recovery, you could miss out on future market gains. If you have questions, concerns, or are interested in learning more, let’s connect.