I've had a number of phone calls over the past several months asking what to do about the stock market. I repeatedly tell them "Maintain a disciplined investment approach." Translation: don’t get spooked by market volatility.
Unfortunately, individual investors rarely heed that advice. What's up with that? Walmart has a 30% off sale and everyone flocks to the store. The stock market has the same sale and everyone avoids it like the plague.
Indeed, many studies show that investors often panic in the face of market uncertainty and sell at exactly the point when they should be buying. The news media certainly does its part to stir up anxiety about the markets. After all, "Market Crash of 2008!!!" sells more headlines than "Stay the course." This barrage of panic-inducing messages makes it that much harder for investors to remain calm and focused on their investment plan and their time horizon.
People need to be reminded again and again that during times of volatility, the best course of action is to stick to a well-designed game plan.
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