Author and personal-finance expert Suze Orman had a simple two-word answer to the question of how to react to a market that just shed more than 1,000 points on the back of growing uncertainties, including the spread of the coronavirus outbreak.
Orman said Monday on CNBC that investors should stay the course and explained why she thought investors worried about their retirement savings after a historic downturn for the Dow Jones Industrial Average should welcome such selloffs.
Responding to a question about Monday’s selloff, Orman explained it this way:
I rejoice. I have to tell you. Because, think about it, the majority of people out there, the way that they do it best is where?–through their retirement accounts: monthly contributions. Most of them are 30, 40, 50 years of age that have at least 10 to 30 or 40 years until they need this money for retirement. So given that that’s how they are investing, why would they want the markets to go up? ‘Cause the higher the market goes, the shares cost more, the less shares their money buys, the less money they make, in the long run. So with this dip, and if it continues to go down,they should just stay the course and actually be quite happy because the market is still incredibly high.
She went on to say: “So it could be a year or two. If [you’re investing for] the long run, don’t sell and continue to dollar-cost average. It’s really just that simple.”
Her comments came after the Dow Jones Industrial Average DJIA, -3.56% shed 1,031.60 points, or 3.6%, to settle at 27,960.80, after plunging more than 1,079.97 points to a session low of 27,912.44. Blue chips registered their third-worst daily point decline in the index’s 124-year history, with the slide at least partially attributed to spread of COVID-19, the infectious disease that reportedly originated in Wuhan, China and has infected nearly 77,000 people and claimed more than 2,000 lives since the start of 2020.
Monday’s decline also turned the blue-chip gauge negative for 2020, leaving it with a 2% year-to-date decline.
The S&P 500 SPX, -3.35% slumped 111.86 points, or 3.4%, to close at 3,225.89, and the Nasdaq Composite COMP, -3.71% fell 355.31 points, or 3.7%, to finish at 9,221.28. The S&P 500 is now down 0.2% year-to-date, while the Nasdaq is still up 2.8% in 2020.
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