Last week, the stock market experienced significant fluctuations that caused concern among investors. Sizable drops on August 5 led to headlines about a "market sell-off" and widespread investor panic. However, the major indexes finished the week with only a modest change.
This short-term panic led many finance experts to take to their channels and tell investors to calm down. Among them, Dave Ramsey discussed this stock market volatility on "The Ramsey Show" and advised investors on handling short-term fluctuations.
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"The stock market has dropped dramatically in the last couple of days," Ramsey acknowledged before sarcastically adding, "Cue the whining, screaming, and gnashing of teeth that everyone's going to die, and we're all going to retire and have to eat Alpo."
Ramsey criticized the emotional reactions stemming from the market's downturn, stating, "short-term, the stock market going up or down is a bunch of drama queens." He emphasized that over longer periods, the stock market is driven by numbers, not daily fluctuations, which aren't reliable for making investment decisions.
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According to Ramsey, the recent downturn was driven by a poor jobs report, which showed slowing growth, rising unemployment, and ongoing concerns about the Federal Reserve's actions. He advises against reacting impulsively to short-term market changes.
"If you check your accounts every morning, you're a spaz," he said, illustrating the futility of obsessing over short-term changes. Instead, he encouraged steady, consistent investing, stating that these fluctuations would become irrelevant over time. "10 years from now, you won't even remember this crap," Ramsey said.
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Jade Warshaw, co-host of The Ramsey Show, posed a question that some viewers might have about investing even more during a large market drop. She asked what advice Ramsey would give to someone considering throwing in a lump sum and buying up more stocks during these short-term market changes.
Ramsey's immediate answer was, "No." He emphasized that doing so could tempt investors into day trading more frequently. "You don’t want to try to time the market. All the data and research tell us that people who try to time the market make less money than people who steadily invest."
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Many financial experts agree that market fluctuations are a normal part of investing. They also stress the importance of having a diversified portfolio to help protect against significant losses if the market continues to trend down.
Tailor your investment strategies to your circumstances. Consulting a financial advisor can help navigate the complexities of investing and ensure that your strategy aligns with your long-term financial goals.
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This article Stock Market Changes, Investors Panic: Dave Ramsey Says, 'Short-term The Stock Market Going Up Or Down Is A Bunch Of Drama Queens' originally appeared on Benzinga.com
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