Center For Retirement Investing

The Center for Retirement Investing helps everyday Americans do a better job of managing their retirement investments. Ivy League professors translate the complexities of modern investing into easy-to-understand concepts and actionable advice.

The Lessons of 2008

Lessons of 2008: It’s tempting to take all your chips off the table, but it’s better to stay the course, says Jay Vivian of the Rebalance Investment Committee.

Some people think that because of the bad experiences they had in 2008 that they really should step out of the market for good. That bad stuff has happened, they never want that to happen to them again. I hope it never does happen again and there’s no guarantees that it’ll never happen again.

All I can say is that we had an interesting experience in the big 401k plan that I was involved in in 2002. And that was that the market peaked in 2000 and it went down and for the latter half of 2000. It went down in 2001. It continued down in 2002.

And people seem to have a time horizon of about two or three years. And at the end of that two or three year period a lot of people had lost a lot of money. Now, as is turned out, in’ 08 they lost even more. But after that time period people said, “I can’t stand the heat anymore. I’m getting out of the kitchen.” And they sold their investments.

And it was absolutely the wrong time to do it. And in 2007, the market peaked I think in October 2007. And the market ran down for 18 months. And a lot of people said, “Man, I can’t stand the heat. I’m getting out of the kitchen.” That was exactly the wrong time to get out because that’s when the market started back up again. And now we’ve seen the market has gone back up to record highs.

So yeah, it’s tempting to want to take all your chips off the table, but it’s better just to stay the course. What goes up will go down. What goes down usually comes back up. And you shouldn’t be looking at this stuff every day or every week or maybe even every month anyway. You’re investing for 50 years, why do you care what it does over the next six months or the last six months? So if you’re feeling like you’re out of it– I don’t know. Everybody else got hurt too. I think it’s a good idea to try to stick with it and stay the course.