Stocktake: Terrified investors should sit tight

Follow the advice of index fund guru John Bogle: Don’t do something, just stand there

Global market action has been scary in 2022. Even before last week’s developments, worries were piling up.

Inflation at multi-decade highs, tighter monetary policy, multiple interest-rate hikes on the horizon, crashing growth stocks, high valuations – you didn’t need to be a perma-bear to be concerned.

Meanwhile, the geopolitical outlook has taken a profoundly dark turn. As CMC Markets’ Michael Hewson commented, it’s “probably not hyperbole” to say Europe is at its “most dangerous juncture since World War II”.

Will things get much worse? Very possibly. So what should you do about it?

Nothing. It's at times like this that investors would do well to remember the advice of index fund guru John Bogle: Don't do something, just stand there. Changing investment tactics might bring short-term relief, but what's your next move, asks Ritholtz Wealth Management's Josh Brown.

“Because anything you do in response to today will eventually have to be undone in response to whatever is to come tomorrow. Once you start down that road, it never ends.”

The right time to choose an investment strategy “is when things are calm and you can think straight”, says Brown. “Not now, in the midst of rising fear and chaos.”