According to Jack Bogle, successful investing boils down to a simple strategy: Buy and hold the stock market for the long term.
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“If you hold the stock market, you will grow with America,” The Vanguard Group founder said Wednesday on CNBC’s “Power Lunch.”
In the long run, there is a high correlation between the stock market and U.S. economic growth, said Bogle, so regardless the economic climate, “Stay the course. Don’t let these changes in the market, even the big one [like the financial crisis] … change your mind and never, never, never be in or out of the market. Always be in at a certain level.”
If you try to trade in and out of the market, “your emotions will defeat you totally,” Bogle added. “Short-term betting is not a good way to go.”
Warren Buffett agrees. Even when the market seems to be tanking, keep a level head and stay the course, says the Oracle of Omaha. In response to wild market fluctuations back in 2016, he told CNBC that buy-and-hold is still the best strategy.
“Don’t watch the market closely,” he advised those worried about their retirement savings at the time. “If they’re trying to buy and sell stocks, and worry when they go down a little bit … and think they should maybe sell them when they go up, they’re not going to have very good results.”
Keep in mind that just because markets go up and down every day, that doesn’t necessarily mean there’s significance to every move. “No matter what the headlines say … American business is going to do fine over time,” Buffett said in a 2017 interview with PBS NewsHour. “Occasionally we go off the tracks with bubbles … but it will never permanently derail us.”
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