Mark Gertler

Henry and Lucy Moses Professor of Economics New York University

Martin Whitman

Founder, Co-Chief Investment Officer Third Avenue Management

Hersh Cohen

Chief Investment Officer Clearbridge Advisors

Stay with stocks if they are part of your long-term investment plan.

Investors are selling stocks thinking that they are fleeing risks. However, they are forgetting that being out of the stock market has serious consequences as well. Over the last decade, for instance, the average annual return for the S&P 500 on a pure price basis, not including dividends, was 4.22% average annual return. Missing just the best ten days of the entire decade dropped that return to a negative five tenths of a percent, and missing the best 40 days, again of the entire decade, depressed the annual return to -10%. So good luck in timing those periods. And being in cash can also be hazardous. Over time, inflation is a cash killer, especially when cash equivalents like three-month treasury bills are returning practically nothing. A moderate 3% inflation rate knocks the value of each dollar down to 97 cents in one year, 74 cents in ten years, and nearly in half in 20 years. These are scary times, but if history is any guide, selling when there is panic in the streets has proven to be a loser’s game.

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