“We are not going to have a depression, and we have survived financial crises before. A century of investing experience, as well as insights from the field of behavioral finance, suggest that investors who bail out of equities during times like these are almost always making the wrong decision.
Look at history: The market eventually bounded back from the damaging stagflation of the 1970s and the savings-and-loan crisis of the early 1990s, when a whole industry had to be rescued. Stocks also recovered from the Asian crisis of the late 1990s. Similarly, investors who held on after the more than 20% one-day stock-market decline in 1987 were eventually well rewarded.
Don’t forget that the U.S. economy is still the most flexible in the world and our “innovation machine” is alive and well.
No one has consistently made money by selling America short, and I am confident the same lesson is true today.”
~Burton Malkiel in today’s WSJ (click here)