Managing Mr. Market

So what should we do?

With the stock market down over 10% so far this year and most newspapers trumpeting the news that a “new bear market” has begun, how should investors respond?

“First, do no harm” the ancient health credo proposes. It’s good market advice as well. Whatever you do, don’t panic. The market has seen bear markets before, and it will again. The key is to avoid selling when it’s low and buying in exuberance when it’s up.

Second, manage your money, not the market. The market is going to do what the market is going to do and there is nothing you can do about it. But you can focus your portfolio to take advantage of new opportunities that may be available.

They key is to have a plan and know what is available for you. If you have enough time to work with and don’t need the cash right away you can do different sorts of things than if you need to draw on your portfolio daily to pay the bills.

Ben Graham used to say that every investor has a partner named “Mr. Market.” Sometimes he’s quiet, and sometimes he shouts, but the key to working successfully with him is to look at the opportunities he shows, not follow his bouts of mania and panic.


Douglas R. Tengdin, CFA
Chief Investment Officer
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