It seems like again, we find ourselves in a skittish stock market driven by fear. And although it is tempting pull your money out given all the short-term volatility, remember that our economy has a history* of figuring things out over the long-term.
We’ve seen this before. The last big market scare was during the Great Recession in 2009. At that time, news about the economic downturn was all over newspapers throughout the world. Years later, we saw volatility when Greece came close to defaulting on its debt obligations. In each case, we eventually bounced back.
So the important takeaway is not to panic. Looking back, if you were to have pulled your money out of the markets during these volatile periods, you also could have missed out on the market recovery that followed.
Remember, the stock market is best suited for those with long-term goals. And if your goals haven’t changed over the past week, then it doesn’t make sense to completely change your investment strategy over what is likely to be a blip in the stock market’s long history. So for most long-term investors, I suggest taking a deep breath. Instead of the familiar saying, “Don’t just stand there — do something”; I like Jack Bogle’s take from Vanguard: “Don’t do something — just stand there”.
*Past performance does not guarantee future results.
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