Because of uncertainty around the future of a trade deal with China, the major stock market indexes have been a bit bumpy in recent weeks.
But experts say the latest fluctuations aren’t a big deal, especially if you’re taking a long-haul view. Currently, the economy is in good shape, with low unemployment, rising wages, and strong economic growth, points out Kate Warne, an investment strategist at Edward Jones. Because of that we’re likely far from what would be a big worry: a recession.
“A recession has to be broad-based,” and meet several characteristics, says Warne. The indicators aren’t pointing that way.
It helps to keep your investing focus on the long term. Since the end of World War II there have been 12 bear markets, which is when stocks lose at least 20% of their value. Yet even with those rough periods, over the past 90 years the average annual gain for stocks is 11.4%.
If you still need some reassurance, here are some resources that might help:
Learn from others’ mistakes. This is what not to do when the market goes down.
When the market drops, you can panic, or you can take a measured approach with this checklist.
Investing for the long run means taking a “set it and forget it” mentality to your portfolio.
Many investors think they can beat, or “time,” the market. That can end up costing you.
Sometimes going against the grain is the best thing you can do. We’ll explain how dollar-cost averaging works, and why it may be a good idea to buy when the market drops.
If you’re going to take anyone’s investing advice, it may as well be Warren Buffett. And he has some clear views on what you should do when the market drops.
May 13, 2019