According to a new Vanguard Perspective, 95% of investors in defined contribution plans didn’t make a single transaction during the Corona crash. 83% of retail accounts also stayed the course.
Less than 0.5% of investors pulled the ripcord and moved entirely to cash. That’s just 5 out of every 1,000.
Maybe the record speed at which the market paralyzed investors, like a deer in the headlights. Maybe, but I’m not so sure. If more investors panicked then we would point to the speed of the decline as the reason why. Now it’s used as an excuse to why they didn’t. Can’t have it both ways.
Maybe we should give these investors some credit. They bought into a philosophy and stuck to it when times got tough. If you can sit through a 35% decline in just a few short weeks, then you can sit through anything. Or mostly anything. I guess we’ll see what happens next time.
Michael Batnick is a managing partner at Ritholtz Wealth Management. He is the co-host of Animal Spirits, What Are Your Thoughts, and The Compound and Friends. For disclosure information please see here.