Don't be spooked into selling, suggests author Burton Malkiel
The stock market's gyrations over the past few days have spooked even the most savvy investors but those who run for the hills at this point will likely regret it, maintains Burton Malkiel, author of the popular "A Random Walk Down Wall Street" and now a Princeton economics prof.
"Investors who have sold out their stocks at times when there have been very large declines in the market have invariably been wrong. We have abundant evidence that the average investor tends to put money into the market at or near the top and tends to sell out during periods of extreme decline and volatility," Malkiel wrote in the Wall Street Journal yesterday.
Good advice but tough to do when many believe a mean, old bear has been unleashed. Nonetheless, investors should stay the course, Malkiel advises.
Where there's risk, there's return, and without taking advantage of scary times like these, the profits will be very hard to come by down the road.
And if you simply can't step up to buy then you should at least consider rearranging your portfolio a bit to bring it back to your intended allocations.
"If increases in bond prices and declines in equities have produced an asset allocation that is heavier in fixed income than is appropriate, given your time horizon and tolerance for risk, then sell some bonds and buy stocks," he says, adding that "years from now you will be glad you did."
In other words, even though the market is still tumbling, don't panic.
Tell us: Is this what you're doing? Or is 2008's debacle too fresh in your mind to do anything else but sell?
By Gordon Powers, MSN Money
Posted by: Who Cares | Aug 10, 2021 12:58:16 PM
I can't believe you are advising people to hold on to their investments in such an obvious downturn of events.
Let me point out the fundamentals of the market are weak, becuase the pumping of cash in the economy (stock market) doesn't really fix any problems.
This bear market that we are entering is for the next 2 years at least. Sell NOW (or use Put OPTIONS) to make huge returns NOW, and then when we finish the double dip buy stocks or CALL options to reap the benefits.
Anything other than this is silly ramblings or someone that hasn't made any money in the market.
Personally I doubled my return (100%+) in the last week using PUT options on the market.. What is YOUR RETURN?
Posted by: GenXer | Aug 11, 2021 10:19:18 AM
I respectfully disagree to 'Who Cares' post. Most Canadians don't have the knowledge to short the markets or use complicated 'call options'.
The Canadian stock market on Monday went on sale. It then regained 75% of the loss on Tuesday. I bought into the S&P index Monday afternoon as a contrarian move. If you read the experts articles/blogs you will see that the bulk of them are saying that the vast majority of Canadian companies are now priced very low based on historical price to earnings ratios - many of these companies have lots of cash and are highly profitable. Since I am not an expert, but an avid learner of the markets, i stick to index investing largely and bought into the S&P index Monday afternoon. Those that sold Monday took a paper loss and made it permanent one. The key for me (and i am not a rich person) has been to dollar cost average into the markets every two weeks with small purchases so i am buying when things are low and also when things go up but over all, my returns have been excellent, always double digits, in the 20-30% range each year. Now, i am in my early 40's so i can afford to be a little more weighted towards resources/equity funds, but i also hold a good chunk in the bond index so that i have a hedge against when the markets are highly volatile (and my bond index has gone up a lot lately with all of the uncertainty). The best thing people can do is act out of knowledge and not out of fear and if possible, not follow the crowd.
Posted by: Q | Sep 30, 2021 1:11:13 PM
When you get right down to it, we're all asking the same urgent question: Just where the hell can I go for a really safe investment? Unless you’re Warren Buffett, Bill Gates or the Saudi Royal family, forget gold. Globally, fiat currency systems are collapsing under the weight of their own BS and these days, even a 6 year old child can see they are nothing but “smoke & mirrors”, Ponzi schemes to enrich the few at the expense of the many. That would leave either select grade gemstones (investment diamonds “roughs & colors”, Tanzanite, Mogok sapphires, rubies and other rarities) or government bonds. So, if you're happy with a 1% return, go with bonds...if not check www.investmentgems.vpweb.ca