When the stock market takes one of its wild rides, there is an immediate torrent of nonsense from all the usual “experts” and everyone else with an agenda or a plan for making money from investor concerns or panic.
Investors should understand that markets fluctuate. That’s normal. It is not a reason to suddenly abandon a well-thought-out long-term plan. After all, football coaches don’t usually throw out their game plan after the first turnover.
Investors might reasonably ask, what causes substantial market fluctuations? The answer is, no one really knows for sure. The crash of 1929 and the major drop in 1987 remain mysteries. Never-the-less, on August 5, 2024, Wall Street was immediately a fountain of “wisdom” purporting to explain what happened that day.
Long term investing should not be influenced by short term emotional swings. Emotions or actions that are based on fear, anger and/or greed can raise havoc with long term goals. It could be helpful to review the factors that led to your original portfolio decisions, perhaps with the help of your advisor(s). If nothing material has changed, why change your portfolio? Why risk being whipsawed?
All comments and suggestions are welcome.
Walter J. Kirchberger CFA
