March 25, 2011
Exactly three weeks ago, Friday March 11th, a magnitude 9 earthquake struck off the coast of Japan. News and photos of the devastation have been extensive. Since then the world has watched with concern as the Fukushima Dai-ichi nuclear plant has leaked steam and radiation. Reaction in the financial markets was, at first, close to panic. The Dow Jones Industrial Average closed at 12,044 on March 11th, but when US markets reopened on Monday the selloff began, culminating in a nearly 500-point slide over three days.
But panic is typically a result of hasty actions based on partial knowledge and little or no thought. That's why on that Monday morning I counseled patience, not a flight to cash. Today as I write this the Dow stands at 12,243, fully recovered from the knee-jerk selloff. The "why" is straightforward: the economy keeps getting better, and the Japanese situation, difficult as it is, is just an event. For long-term investors, events are best missed.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).