Vanguard's Advice for Handling Market Downturn

Here's Vanguard's advice on how to handle the stock market downturn:

For many investors, the wisest response is no response at all. Take a careful look at your portfolio and ask yourself if your overall long-term strategy is sound. Do you have the right asset mix for your investment goal and time horizon? Are you properly diversified? If the answer to those questions is yes, you're probably better off sitting tight for the time being.

Whether the markets are doing well or struggling, your investment decisions should always be strategic, not tactical. In other words, base your decisions on "big picture" considerations and the soundness of your investment plan—not on today's headlines. Reacting to a downturn in the stock market emotionally, with a major shift in your portfolio, is generally a very poor move.

"Stay the course" may be a cliché, but it's often the best advice in uncertain times. It's important to remember that no one can predict what the market will do tomorrow. That's why a long-term focus is so important.

Exactly.

Comments

[mbhunter]

Heh. A mutual fund company advising people to sit tight. Now there's a surprise.

[Santos]

It is a surprise; mutual fund companies make money when inverstors trade frequently (even no-load funds charge redemption fees for short term trades)

[Rich Schmidt]

@Santos: But they stop making money if you pull everything out of their fund and put it into something else. They'll make more if they keep you as a customer than they will if they lose you altogether.