In times of market downturn, professionals advise investors to remain calm and not to panic. Citing past events like the 2020 pandemic market crash, the S&P 500 has significantly recovered over five years. Vanguard emphasizes sticking to financial plans, as drastic reactions can hinder long-term gains. Experts suggest avoiding overreactions, focusing on defensive stocks, and not attempting to time the market. With current market conditions showing the S&P 500 in correction and the Nasdaq in bear territory, caution is essential despite the urge to react.
Investors who have stayed the course during downturns have been able to take advantage of market recoveries and have typically come out ahead of those who moved to the sidelines.
It's human nature. My BI colleague Max Adams outlines three things investors can consider to weather the worst of the downturn: don't overreact, consider defensive stocks, and don't try to time the market.
Vanguard sent a note to customers this week advising them to "resist the urge to deviate from your financial plan" amid rising uncertainty.
Things could get worse before they get better. The S&P 500 is squarely in correction territory. The Nasdaq is already in a bear market.
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