Calm, Care, & Caution

How to stay calm during challenging times? The late Vanguard founder John Bogle used to say that in times of market turmoil, “Don’t just do something. Stand there!” His point was that panic selling after market declines guarantees loss. Historically, steep and rapid declines are followed by upswings. Current economic forecasts cover a wide range of outcomes. None of them good. It’s a safe bet the second quarter will experience a sharp economic decline. Market price declines have already assumed a lot of bad news. If you wait for the good news, market price increases may very likely snap back before you can act.

“Don’t just do something. Stand there!” John Bogle

What Not to Do?
1. Don’t try to time when markets will recover. Over time, markets and the economy have expanded much more than they’ve declined. Time in the market increases your odds of long-term success. (see chart below)

What to Do?
1. Ignore financial headlines! Bad news is often overhyped and over repeated.
2. Carefully review your budget, savings, and short-term goals. Its recommended to have 3-6 months of expenses in checking and short-term savings.
3. Keep to your long-term game plan.
4. Investing at today’s lower prices reduces your overall investment costs, so that over time you should realize a good return on your investments.

“Don’t confuse movement with action.” Ernest Hemingway

 

Jerry Matecun – Founder, President
Expert guidance to plan your future, preserve your lifestyle, and retire with confidence. For a confidential consult, contact me at jerry@compoundvalue.com or 949-273-4200.

 

PLEASE NOTE: Nothing herein constitutes investment, legal, or tax advice. For details please see Disclosure.