Should I stay or should I run like crazy?
Investors no doubt have plenty of questions after Wall Street’s Wednesday meltdown, which wiped more than 800 points off the Dow DJIA, -0.06% making for the worst day since February for it and the S&P SPX, -0.22% The Nasdaq COMP, +0.05% saw its worst session since Brexit back in June 2016.
The selloff may have legs, judging by the looks of things this morning, while potential catalysts pile up—bond yields, the trade war, global growth worries, earnings jitters, your taxi driver telling you to sell.
But maybe none of that should matter to future retirees, who may want to recall some evergreen advice from investing legend Warren Buffett: “Be fearful when others are greedy and greedy only when others are fearful.”
That leads us to our call of the day, from Reformed Broker’s Josh Brown, who says savvy U.S. investors are not for scaring.
“Americans have accumulated $28.3 trillion in retirement assets, 19% of which is in 401(k) accounts ($5.3 trillion). There are 550,000 plans and 54 million participants. These dollars are coming in every month, the lower the prices for stocks, the better,” said Brown in a wee-hours tweet-rant, as he adds: “F****ing bring it.”
Brown goes on to say that with 160 million Americans in the workforce and 80% of them under 54, “they’re in the accumulation phase of their lives. I know you want them to panic for the clicks, but they won’t. They are automated buyers of dips. It‘s the best thing for them.”
Understandably, not everyone may be feeling so Buffett-brave after Wednesday’s drama. Blogging for CrackedMarket, Jani Ziedins says those losing sleep over this fresh volatility may want to trim position sizes to something that is more manageable.
“The key to surviving the market is keeping your head when everyone else is losing theirs. Do whatever is necessary to reclaim your perspective. If that means dialing back your position sizes, then that is what you need to do,” says Ziedins,
So if you think a 0.25% bump in Treasury rates will clobber the economy, then sell and lock-in profits, but if you don’t think the economy is “teetering on the verge of a recession,” ignore the noise and wait for prices go up, he says.