The Market Is Moving. Most People Should Sit Still.

A Vanguard fund with 60 percent U.S. stocks and 40 percent U.S. bonds was down 3.2 percent on the year as of Friday’s market close. If you’re nearing retirement or just started it, perhaps your portfolio looks something like this. Hopefully this brings some comfort.

That Vanguard fund’s average annual return is 8.1 percent since its inception in 1992 — for people who did not try to trade in and out of scary market periods. That a balanced, steadfast investment strategy did that well ought to help your nerves too, even if we can’t truly know what the next 28 years will bring.

We do know, however, that stocks can fall by 10 percent or 20 percent or more in relatively quick fashion. It’s what markets do, at least sometimes. We’ve seen it before, in 1987, in 2001 and in 2008. And we’ll see it again after this passes. There’s always a next time.

Few people had the “spreading virus spooks markets and threatens economy” square on their global meltdown bingo card. We don’t know what will cause the next drop, either. So predictions are mostly useless, today and always.

But there are a couple things we know: Stocks have delivered decent gains over long periods of time to people who persist, and successful investors do not buy when prices are high and sell when they are low.

Nothing that is happening today changes that.

Article source: https://www.nytimes.com/2020/03/09/business/stock-market-coronavirus-investing.html