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Warren Buffett: "Don’t watch the market closely"

Warren Buffett, Jack Bogle and financial planners agree: When stocks are down, ‘don’t watch the market closely’

 

Despite an attempt to recover on Tuesday, the financial markets remain mostly in the midst of a lengthy sell-off that has hit some of the most well-known stock names.

According to CNBC, the Dow Jones Industrial Average’s seven-week losing streak is the longest since 2001, while the S&P 500’s six-week losing streak is the biggest since June 2011.

While many retirees may be unsure what to do in such a volatile market, Warren Buffett has stated that the answer is simple: don’t worry too much about it.

During a period of severe market changes in 2016, Buffett said CNBC, “I would tell (investors), don’t watch the market closely.”

Investors that acquire “good companies” over time will see results 10, 20, and 30 years later, according to the Oracle of Omaha. “If they’re trying to buy and sell stocks, they’re not going to have very good results,” he remarked. “The money is made in investing by owning good companies for long periods of time. That’s what people should do with stocks.”

Many experts, like Warren Buffett, encourage investing in index funds, which are automatically diversified and hold all of the stocks in an index. Big-name American corporations like Apple and Amazon, for example, are included in the S&P 500.

The late great investor Jack Bogle, like Buffett, advocated for a buy-and-hold approach. He previously told CNBC that buying stocks and keeping them was the greatest approach to invest since “your emotions will completely destroy you” if you try to sell your holdings to prevent losses and then come back in.

In 2018, Bogle urged, “Stay the course.” “Don’t let these changes in the market, even the big ones (like the financial crisis) … change your mind and never, never, never be in or out of the market. Always be in at a certain level.”

Financial experts tell CNBC Make It that trying to respond to market trends is likely to backfire for most investors. Waiting out the market’s ups and downs is preferable.

 

“If you miss the recovery, there’s a very, very good chance you’re going to make it harder to hit your financial goals.”

 

“If you’ve got a diversified portfolio, if you’re just buying some (index funds) and you’ve got a long enough time horizon, it might be best just to ride these roller coasters,” says Ashton Lawrence, a certified financial planner and partner at Goldfinch Wealth Management.

According to Sean M. Pearson, a financial advisor at Ameriprise Financial, investors who sell when markets are down risk derailing their long-term intentions.

He says, “Markets don’t settle down, they settle up.” “By the time the news looks a little bit better, the market has already recovered. And if you miss the recovery, there’s a very, very good chance you’re going to make it harder to hit your financial goals.”

Instead than checking their 401(k) accounts every day, most investors should ignore them, according to Pearson.

“I’ve been a professional investor for over 20 years, I haven’t logged into my 401(k) site since the beginning of this (slide),” he says. “For a lot of people, not looking at this might be the best way to kind of help them sleep at night.”

 

ARTICLE: CNBC website

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