Don’t Panic (About The Stock Market)

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That’s a little maxim from The Hitchhiker’s Guide to the Galaxy and one you should heed if you’ve been watching the stock market tank in recent months and wondering if you should cut loose. Don’t panic. Markets go up and markets go down and mainstream media is the business of selling sensationalism. Why do you think the news is always about murders and burglaries? Because the heartwarming stories are for Oprah.

Still panicking? Check out the latest Ben Stein column in Yahoo, written in his trademarked dry humor style, and enjoy the awesome simplicity that is his advice. Here’s my favorite excerpt:

5. Trust the major newspapers to know more than Warren Buffett.

Yes, Buffett’s the best investor in history, and says to stay in the market and buy index funds. He also says now is the time that stupid money is leaving the market.

But pay no attention to that fool! Pay attention only to some new young gunslinger at The Wall Street Journal or Barron’s who tells you it’s time to sell. Even pay attention when someone with no investing track record tells you to sell out of Berkshire Hathaway, one of the most successful investments of all time.

No, don’t trust Buffett or other “geniuses” like John Bogle. Trust whoever comes across as the smartest-aleck and most glib, “on whom assurance sits, as a silk hat on a Bradford millionaire” (to quote T.S. Eliot).

And if you’ve never heard of The Hitchhiker’s Guide to the Galaxy, go borrow it from the library because it’s great humor (so much better than the movie!).

{ 4 comments, please add your thoughts now! }

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4 Responses to “Don’t Panic (About The Stock Market)”

  1. Fred says:

    I actually shifted my retirement portfolio to a slightly more aggressive stance with the downturn in the market. When you have a downturn like this, the overall risk in the market is essentially reduced (market performance more closely matches earnings), meaning that stocks that were much riskier prospects 5 months ago, are, as a class, now much safer. If you think of the market in terms of price and risk, Buffet’s philosophy makes perfect sense.

    One Project Closer

  2. I’m sitting tight, no extra pouring of money into the stock market, no pulling out either. Just keeping it steady so that by the time I retire in 30-35 years I will have experienced a gain. In the mean time I’m just going to ride the waves up and down ’til then.

  3. RC says:

    Totally agree. Its hard not to get caught up in the hype sometimes, but who wants to “sell low”? I just posted yesterday w/ advice from Brnjamin Graham, who basically recommended to move money into stocks after a decline, and into bonds after a significant rise. Makes sense to me. But it is hard to pull money back after a significant rise as well.

  4. Sometimes it’s hard to sustain when you see the prices go lower and lower. How much more can it go down? You never know.
    But those with healthy nerves buy now – and usually they are the winners.
    I have no problems pulling money after significant raise however – getting out profits is sweet.

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