NEW YORK (MainStreet) — Panic is reaching a fever pitch for investors watching the market plummet. But while the Dow plunged 531 points on Friday and amid speculation that we could see another 600-point drop today, there's no need to respond rashly. A bit of zen can actually prevent investors from making decisions that exacerbate an already difficult situation.
With the Dow and S&P 500 reaching all-time highs in recent months, investors had to expect this, said Matthew Tuttle, CEO of Tuttle Tactical Management, based in Stamford, Conn.
“Investors who are prepared will be fine, but those who have come to believe ‘this time is different’ will get hurt like they always do,” he said.
“This bull market will die slowly, but all bull markets eventually die.”
These ups and downs are just part of being in the markets.
Avoid Making Predictions
Instead of trying to calculate when the pullback will occur or stop, investors should think long-term.
“The market timers’ hall of fame will always be empty," Tuttle said.
Since bull markets cannot last forever, one option is to allocate your retirement funds to a tactical money manager or tactical ETF, Tuttle said. Even if you get back to even and “earn” all of your losses from a previous dip in the market, investors should not necessarily be complacent with large losses in their retirement funds.
Buy and hold aficionados will argue that the strategy works, because even though the market falls, it eventually comes back. Of course, that's not always the case, and it depends on your outlook in and timeline for retirement.