In an article for The Wall Street Journal, Jason Zweig shares what non-professional investors are doing to handle the latest drop in the stock market. Many Wall Street professionals view Main Street investors as inexperienced but, as Zweig writes, that’s a misconception; many of them are extremely well-informed, careful in their decision-making, and seasoned by experience of the markets’ volatility.
Zweig interviewed individual investors who, rather than chasing short-term rewards, have their eyes on the long-term prize. One of them even cut her holdings by 10% when the market was peaking in November instead of going all-in as many less-careful investors did. Another uses figurines of a bull and a bear to remind him to keep emotions out of his investing strategies. And one other investor uses spreadsheets to set his portfolio on autopilot, rebalancing as the market goes up and down. The process is automatic, he says, so that he can tune out the daily noise and only make a move when it’s necessary. Another retiree has held onto the same stocks, Computer Services Inc. and Apple, for 42 and 25 years, respectively, telling Zweig that “trading doesn’t make sense…I’ve…made up my mind that I never really intend to sell any of these stocks.” To these investors, this year’s decline is more of an opportunity than a catastrophe.
Last year, online traders took Wall Street by storm as they stampeded into stocks like AMC Entertainment and GameStop. Their risks paid off with soaring gains that then crashed back to earth. But while Wall Street looked down at those “itchy-fingered thrill seekers,” Zweig writes, they are not typical of the standard individual investor. And though investors have drained over $51 billion from stock mutual funds and ETFs since the end of March, that’s actually less than one-third of 1% of the total assets in stock funds right now. So while the individuals he interviewed may be more thoughtful than most, the article contends, it would take much more than this year’s roller coaster ride to upset the resolve of many investors in today’s market.