Why investors should stay the course during turbulent markets

Jun 1, 2022, 7:30 PM | Updated: Jun 19, 2022, 9:54 pm

SALT LAKE CITY — After seven straight weeks of losses for the S&P 500 and Nasdaq, and eight for the Dow Jones Industrial Average, all three rallied last week. Now, they’re sliding again.

That Wall Street rollercoaster has many people frightened about their investments and retirements.

Current events headlines are also rough on investors. Between falling markets, rising inflation, the war in Eastern Europe, and the resurfacing of COVID-19, again, many people have pulled out of the markets.

During turbulent times, the stock market resembles the ride Cannibal at Lagoon. There are drops. We are talking big, memorable, stomach-churning drops. But if you look at the data, turbulent times, like right now, also yield some of the biggest ups.

In fact, there’s an old trope in the investment world that says, “if an investor missed the 10 best days in a decade, they would slash their earnings to almost nothing.”

While that rings true, the flip side can certainly be attractive. Imagine if you somehow managed to time the market and miss the ten worst days. You would likely be rich!

Do not be tempted, warned LendingTree’s, Matt Schulz.

“It just almost never works,” he said.

Schulz, and most investment advisors, say trying to time your investing to the ups and downs of stock markets is a “fool’s errand.”

And according to data compiled by Lending Tree and shared with the KSL Investigators, many investors agree. Some 38% of investors told Magnify Money/Lending Tree they sold stocks last year due to a current event. Forty percent of them regretted it.

Schulz, who studies market trends, said panic selling is understandable.

“It can make sense in your head to say, ‘OK, I’m going to cut my losses,’” he said.

But shrewd investors do not try to sell before a drop. And better still, they try to buy after a drop. And then let it ride back up for as long as they can.

“You can go in and buy more with the thought that that’s eventually going to be more valuable in the future,” Schulz explained.

Younger investors have more time to ride out market slumps, so Schulz said they should stay invested. For those approaching retirement, generally, that is a time to invest more into lower-risk, more stable stuff like bonds. But that does not always apply to every situation, so Schulz advises seeking professional financial advice.

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Why investors should stay the course during turbulent markets