The stock market dropped over 1,700 today so far, causing many investors to panic. Heavy selling across U.S. and global markets has left many seeking alternatives. But with so much uncertainty, what should people know about investing in a down market?

investing in a down market charlie munger quote

Investing In A Down Market: 3 Things to Know – With Quotes

If you are unsettled by the idea of a stock market downturn, here are a few quotes from some of the world’s greatest investors to put your mind at ease.

1. Never Bet Against America

“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored and perhaps made more generous. And, yes, America’s kids will live far better than their parents did.” – Warren Buffett, 2016

When you’re investing in the U.S. stock market, you’re essentially investing in America. Sure we’ve had our ups and downs. But the United States remains by far the world’s wealthiest nation. The broadest measure of the nation’s wealth is its gross domestic product (GDP). No other country in the world even comes close. U.S. GDP hit $21.4 trillion in the fourth quarter of 2019.

Today, the U.S. economy is still by far the strongest in the world. And it has held that position since 1871.

2. Don’t Over Hype the News

It’s in the nature of stock markets to go way down from time to time. There’s no system to avoid bad markets. You can’t do it unless you try to time the market, which is a seriously dumb thing to do. Conservative investing with steady savings without expecting miracles is the way to go.”  Charlie Munger

In our fast-paced world, it can be easy to get overwhelmed or freak out during the latest global event. Whether it’s the coronavirus or the Democratic primaries, Charlie Munger and other successful investors aren’t biting. In fact, some of the best investments are made while investing in a down market. Think of these sudden market drops as potential buying opportunities. Your portfolio will have ups and downs, but long-term investors need not worry about the latest news.

3. Diversification

I do not recommend stocks because the economy is strong, corporate earnings are up, taxes are down, the market is in an uptrend or Donald Trump is in the White House.

I recommend stocks because more than two centuries of financial history demonstrate that a diversified portfolio of common stocks – or, better yet, uncommonly good stocks – is the best way to grow your wealth and protect it from the ravages of inflation.” – Alexander Green

In a recent article, Alexander Green breaks down the advice he has used for more than 35 years as a portfolio manager, investment analyst and financial writer.

  • Asset Allocation – Capitalize on inherent market uncertainty
  • Select and own companies that produce substantially higher returns

Alex notes, “A broadly diversified portfolio lessens your risk and volatility. So does asset allocation. (That means spreading your investment capital among non-correlated asset classes. These can include high-yield and high-grade bonds, real estate investment trusts, and Treasury Inflation-Protected Securities.)”

It’s important to stay calm. And do not let your emotions dictate your decisions. Investing in a down market can be challenging, but do not let it overwhelm you. Double down on prudent, time-tested investing principles.

To follow Alexander Green’s time-tested advice for wealth creation: Click Here

Is It Good To Invest When The Market Is Down?

Whether the market is up, down or somewhere in-between, investing will always help you reach your financial goals. Keep your fears in check, bet on America, don’t over hype the news. And most of all diversify your portfolio.

“If you buy quality, asset allocate properly, diversify broadly, reduce your investment costs and minimize Uncle Sam’s tax bite, you’ll do just fine.” – Alexander Green

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