Stock markets, when & why a drop is better than a rally
Falling stock markets may stress out traders and threaten the bonuses of executives and professional investors. Even cool-headed portfolio managers can risk their jobs or reputations buying into a market crash.
But regular investors, especially those saving for retirement, have an advantage over the professionals. It’s not rocket science: They can afford to be patient. By buying in good times and bad, they benefit from gradually rising markets. And it’s the bad times that deliver the most oomph to their portfolios. By buying extra when stocks drop – as Werner did in 2008 and 2009 – they’re following the advice of a dozen Warren Buffett quotes, like: “Be fearful when others are greedy, and greedy when others are fearful.”