Don’t Panic Sell

The markets have been ugly for the past few days. The Nasdaq was down 5% yesterday and is now down over 21% year-to-date. There’s nowhere to hide either. Bonds are having their worst start to a year (-10.79%) on record. Inflation is running at a 40-year high, and the Fed is aggressively tightening monetary policy. The news couldn’t be more bearish.

But this is not the time to panic sell. Hopefully, you already have a plan in place, with clear rules about what moves to make in a volatile market. The worst mistake you can make is to let emotions drive your investment decisions. A diversified portfolio, with the appropriate amount of risk to match your needs, is like a ship meant to survive all storms. But no one can save you if you jump out.

There are opportunities to do something in every market environment. And today that opportunity may be to deploy cash sitting on the sidelines. Risk assets are on sale. This doesn’t mean the pain can’t get worse from here. Stocks could go lower tomorrow, next week, next month, or even next year. I am old enough to remember when bear markets lasted 18 months or longer. But you’ll probably be glad you bought stocks at these levels 5 years from now.

The beauty of long-term investing is that you don’t have to time it perfectly. Take Warren Buffett’s advice this week. Be greedy when others are fearful.


Thanks to CNBC for having me on their LIVE: Markets in Turmoil segment with host Brian Sullivan and fellow CNBC Advisor Council colleagues Doug Boneparth and Lee Baker last night.

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