Should I Pull Out of the Market?

As we’ve seen the stock market go up over the last several years, but then we’ve also seen it decline precipitously at various times over the last couple of months.  The question comes, especially when the market is going down, “should I pull out of the stock market,” or “when should I pull out of the stock market?”  And I would say this:  never change in the short term your long-term strategies. 

We know that bubbles always burst.  By that I mean that the market gets up to a point if you remember the dot com crisis where it was irrational.  It just didn’t make sense.  So the bubble burst and it came down.  However it came back up.  It went down after nine eleven and it came back up.  It’s gone down recently because of the credit crisis on Wall Street.  However, it also goes up. 

Nick Murray, who is a well respected advisor, says this:  “A bear market is a period of time during which people who believe, ‘this time it’s different’ sell their common stocks at panic prices to people who understand, ‘this time is no different’.”  I’ve been in the financial services world for 40 years, and I say “amen” to that piece of advice.

Yes, markets go up and down, and there will always be economic cycles.  But the people who lose most are those who try to figure out in the short term what to do and they don’t think long-term.  If they are thinking long-term, then a down market is normal; it’s going to happen.  Maybe the news is a little bit different, but the market is going to go up and going to go down.  When should I pull out of the market?  Well, when I, in my long-term strategy, have determined that now is the time.  Perhaps I’m retired, and so I begin to move out of the stock market.  Certainly, legitimate.

Warren Buffett was asked recently how he felt about a million home foreclosures.  I think he summed it up pretty well. He said, “I look at that as a million buying opportunities.”  He was not speaking, of course, to those people who have lost their home and the pain that goes with that, or to the people who have lost their job and the pain that goes with that.

But, the fact of the matter is that if I have managed my money according to biblical wisdom and biblical principles, then I am well positioned in times of down markets to be a buyer as opposed to a seller.  I can take advantage of things.  I think of the real estate market.  If people had delayed buying and continued to rent because they could not afford to buy, now is the time to buy.  Prices have come down in some parts of the country by forty and even fifty percent.   So there are always buying opportunities out there for the people who have managed their money according to God’s plan, God’s principles, and God’s wisdom.

I hope you’ve found this advice useful and we would invite your comments.  Tell us what you think of this, but also give others advice and interact with us.  Thank you for taking your time to be with us.