Staying the Course in Today’s Market Will Benefit Resilient Investors

A lot of financial advice investors get these days can range from buying the current dip to staying in cash or avoiding the markets altogether. However, sometimes the best course of action is to do nothing and stay the course, according to Sallie Krawcheck, a former executive at Citibank and CEO of investing platform Ellevest.

“The worst advice is telling someone to do something,” Krawcheck said in a Business Insider report. Whether it’s to buy in now because it feels like the market is oversold, or buy small cap stocks because they should come out of this better, or buy [stock in]X, Y, or Z company.”

Even with the roller coaster of volatility that the markets have been seeing these days, traders can even get wiped out. Actively managing one’s own portfolio would be akin to taking over the wheel of a car with flat tires–regardless of the switch, you’re probably not going to get anywhere.

“Even the professional active trader doesn’t do it well all the time,” Krawcheck warned.

So then what is the best strategy moving forward in these times of uncertainty brought about by the coronavirus pandemic? It would be simply staying the course.

Avoid the Temptation to Look

Whatever strategy one implements, whether it’s buying the current dip, using factor-based strategies or dollar cost averaging, the best course of action can be inaction. There’s a lot of anxiety in the markets, especially during the height of the sell-offs in March and who knows what lies ahead.

As such, Krawcheck recommends avoiding the temptation to look at your account balances daily. It’s a difficult thing to do nowadays, especially with mobile apps giving investors the ability to look at their accounts with a few finger taps.

“If you don’t need that money, if it’s long-term money — which is what it should be if it’s invested — resist the urge to look … it will just drive you bonkers,” she says. “Do whatever you need to do to keep yourself from looking.”

One Action You Should Take

While Krawcheck says the best action is to stay the course as opposed to experimenting or shifting capital around unnecessarily, there is one action she does support: increasing deposits. With more deposits, investors can have cash available to make investments when opportunities arise.

“There’s a very understandable desire to do something. But, if you do anything, it should be to increase your recurring deposits into your diversified investment portfolio,” she says.

For more market trends, visit ETF Trends.