by Andy Rachleff, Wealthfront
https://blog.wealthfront.com/what-goes-up-must-come-down/
The best response to corrections in the stock market is to change nothing.
- Andy Rachleff is Wealthfront co-founder and CEO.
- What should investors do about the February 2018 stock market correction? Do nothing.
- Staying the course is hard emotionally but important.
- After Brexit and Trump's election, indexes dropped, recovered, dropped again, and then grew beyond where they were before the event happened. Clients who stopped adding deposits during this time paid for it.
- Stock market returns over time are very consistent despite day-to-day volatility — ~7% per year after inflation across all major sub-periods (but it looks like his sub-periods are like 60 year windows?!)
- "The short-term fluctuations in market, which loom so large to investors, have little to do with the long-term accumulation of wealth."
- You don't hear much about long-term investing in the news because it's boring and cheap, the financial media thrives by inducing panic and parts of the financial industry only make money when you do act.
- "As our research showed in There’s No Need to Fear Stock Market Corrections, markets on average recover from corrections in less than 90 days."