The following is an opinion piece posted on Bloomberg yesterday. The author, John Authers, essentially make an argument for investors to simply do nothing.
Extreme situations create opportunities; they also offer the chance to lose ungodly sums of money. That is why we need to be careful with what psychologists call activity bias. It is a natural emotion, as I have written before, and doing nothing requires great self-discipline. But it is often what the situation calls for.
He calls for investors to stop attempting to buy the dip by referring to a famous op-ed that Warren Buffett wrote for the New York Times during the financial crash urging people to buy more.
Later on, he cites John C. Bogle’s advice on what do during times of volatility in the markets:
“My rule — and it’s good only about 99% of the time, so I have to be careful here — when these crises come along, the best rule you can possible follow is not “Don’t stand there, do something,” but “Don’t do something, stand there!”
To be fair, Buffett is even resisting his inner Buffett so far which should at least give some credence to the conclusion.