Warren Buffett, Jack Bogle And Other Advisors : Says Don't React Against The Market, Buy And Hold

Although the financial markets attempted a bounce back on Tuesday, they are largely in the midst of an extended sell-off that has punished some of the biggest names in stocks.

The Dow Jones Industrial Average’s seven-week slump is its longest since 2001, while the S&P 500′s six-week losing streak is its longest since June 2011.

“I would tell [investors], don’t watch the market closely,” Buffett told CNBC in 2016 during a period of wild market fluctuations.

The Oracle of Omaha added that investors who buy “good companies” over time will see results 10, 20 and 30 years down the road. “If they’re trying to buy and sell stocks, they’re not going to have very good results,” he said. “The money is made in investing by owning good companies for long periods of time. That’s what people should do with stocks.”

Many experts, including Buffett, also recommend buying index funds, which are automatically diversified and hold every stock in an index. The S&P 500, for example, includes big-name American companies like Apple and Amazon.

Like Buffett, the late legendary investor Jack Bogle also recommended a buy-and-hold strategy. He previously said that buying stocks and holding them was the best way to invest because “your emotions will defeat you totally” if you try to sell your holdings to avoid losses and get back in afterwards.

For most investors, trying to react to market trends is likely to backfire, financial experts tell CNBC Make It. It’s better to wait out the market’s ups and downs.

“If you’ve got a diversified portfolio, if you’re just buying some [index funds] and you’ve got a long enough time horizon, it might be best just to ride these roller coasters,” says Ashton Lawrence, a certified financial planner and partner at Goldfinch Wealth Management.

Investors who sell when markets are down may actually end up derailing their long term plans, says Sean M. Pearson, a financial advisor at Ameriprise Financial.

“Markets don’t settle down, they settle up,” he says. “By the time the news looks a little bit better, the market has already recovered. And if you miss the recovery, there’s a very, very good chance you’re going to make it harder to hit your financial goals.”

Instead, most investors might want to ignore their 401(k) accounts instead of checking them every day, Pearson says.

“I’ve been a professional investor for over 20 years, I haven’t logged into my 401(k) site since the beginning of this [slide],” he says. “For a lot of people, not looking at this might be the best way to kind of help them sleep at night.”

SOURCE: CNBC
IMAGE SOURCE: CNBC