“What’s up with the stock market, and what should I do?”
This is a question I get regularly, but even more so recently when average annual stock market returns were being gained or lost in days or hours.
My personal gauge of heightened investor anxiety is not the VIX, the so-called “fear index” — it’s if I get a text from my eldest daughter asking me about the stock market. I got a text from her recently. The last time was during the depths of the COVID sell-off in 2020.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
While you can’t control the markets, you can focus on four things you can control no matter what environment you’re in — we call them Vanguard’s Principles for Investing Success:
- Create clear, appropriate investment goals
- Keep a balanced, diversified mix of investments
- Minimize cost
- Maintain long-term discipline
That last one — maintain discipline — is the toughest to follow when markets are choppy and investor sentiment is near all-time lows.
So, overall, did Vanguard investors maintain discipline through these squally markets?
Yes, indeed.
During the recent height of market volatility, millions of self-directed investors on Vanguard’s brokerage platform maintained the tried-and-true investment principles of discipline and diversification as Vanguard’s brokerage platform remained consistently accessible through five days of heightened demand.
From April 3 through April 9, more than 91% of Vanguard investors did not place a trade and stayed the course. And for those clients who did trade on our brokerage platform, the vast majority were net buyers of equities, at a ratio of more than 4.8 buyers for every one seller over the five days.
And if you went to trade on Vanguard’s website or mobile app during these periods of market volatility, you’d be greeted with a pop-up message with tips for trading during volatile markets — including, “if your financial goals haven’t change and you have a diversified portfolio … you may not need to change your current investing approach.”
This is just one way we work to encourage healthy investing behaviors, even when emotions may be at an all-time high.
You stand there, we'll do something
One of my favorite quotes from Vanguard founder Jack Bogle is, “Don’t just do something, stand there.” Of course, he meant “tune out the noise” and don’t make a knee-jerk, emotional decision when it comes to investing — especially in volatile markets.
You may not need to do anything if you are already in an investment that aligns with your long-term investment or short-term savings goal.
For example, if you are in a multi-asset fund or advised portfolio, chances are those portfolios readjust asset mixes back to target weights for you.
Those with advised portfolios in taxable accounts may have even received the added benefit from tax-loss harvesting, which can lower taxes by realizing investment losses that can be used to offset gains and/or income — all while maintaining the strategic asset mix.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
If you are in a fund that adjusts its asset mix as you get closer to a goal, such as retirement or education enrollment portfolios, you may already have an appropriate asset mix that aligns with your goal and rebalances back to appropriate asset weights.
And if you have short-term savings, you may not need to do anything if the money is earning the interest or yield you deserve either through a high-yielding savings vehicle or money market fund.
Of course, everyone’s situation is different, which is why it’s important to design an investment plan that’s best suited for your specific goals and reevaluate when your personal circumstances change — not just because market prices change.
And, it’s important to remember, all investing is subject to risk, including the possible loss of the money you invest and that diversification does not ensure a profit or protect against a loss.
50 years and beyond
Vanguard’s principles for investing success, inspired by Jack Bogle, have gotten clients through nearly 50 years of ups and downs. I’m confident they’ll continue to get clients through the next 50 years and beyond.
As for my daughter’s text, I replied, “Markets go up and down. Stocks generally perform well over the long term but are susceptible to volatility. Best bet is to stay the course.”
Her reply, “okay, mr. finance.”
Related Content
- Market Turmoil: What History Tells Us About Current Volatility
- Three Keys to Logical Investing When Markets Are Volatile
- Four Historical Patterns in the Markets for Investors to Know
- Gambling vs Investing: How to Tell the Difference
- A Frugal Saver's Guide to Spotting Investment Costs
-
The Final Countdown for Retirees with Investment IncomeRetirement Tax Don’t assume Social Security withholding is enough. Some retirement income may require a quarterly estimated tax payment by the September 15 deadline.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts SayThe August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts Say
The August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
Kickstart Your 2026 Retirement Plan NowRetirement can feel far-off, or too close for comfort, depending on where you’re at. But one thing’s clear — now is the ideal time to get your retirement plan in order.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial PlannerHolding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Beyond Banking: How Credit Unions Serve Their CommunitiesCredit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
-
Don't Toss It! Why Your Medicare Annual Notice of Change MattersIf you have Medicare Part D or a Medicare Advantage plan, reviewing your Annual Notice of Change is crucial. It can save you money and ensure you can still see your preferred doctors and hospitals.
-
S&P 500 Hits New High After Oracle Earnings: Stock Market TodayAnother down day for Apple held the Dow Jones Industrial Average back, though.
-
StubHub IPO: Should You Buy STUB Stock?The highly anticipated StubHub IPO is right on our doorstep, with the online ticket marketplace expected to start trading later this month.
-
What Your Portfolio Says About You – and Your Relationship with RiskHow well do you understand yourself and your risk tolerance? Being able to answer this question will help you become a better investor.
