Mo Money's Building Wealth Blog

The stock market has had a rough few weeks.  The S&P500, NASDAQ, and Dow Jones were all down significantly and the last I checked my specific portfolio was down by more than 5%.  What did I do about it?  Absolutely nothing.

Here’s why.  Market corrections (declines of at least 10%) are a normal part of the ebb and flow.  In fact, they occur in one form or another just about every year.  Can they spook you?  Absolutely, however I have found in over 30 years of investing that the best thing to do is wait and hold.  This is assuming of course that you have a well-structured portfolio and a good balance of cash and near liquid assets (like Treasuries and CDs) to get you through any lean times.  You see, the market always comes back.  And when it does it typically comes back higher and stronger.

Coincidentally, I had to call my brokerage with a random question just last week. The phone app was acting strange, so I called them.  Typically, I get a warm body immediately, but this time I waited for over 30 minutes until I finally hung up.  Apparently, there was so much panic that people were calling in either trying to get some reassurance or trying to get out of their positions.  Either way it just showcased for me the momentary hysteria that can happen when the markets temporarily correct. 

Thankfully, this past week was a bit better as the market regained almost all of what was previously lost.  Is this correction over?  Will it turn into a bear market?  Are we headed into a recession?  Nobody really knows.  The best defense is a well-structured portfolio that allows you to wait out market corrections without making any hasty decisions.