Suze Orman: This Market Is a Gift to Investors

Investors should stay on course and avoid panicking, Suze Orman says.

“This is a gift from the stock-market heavens,” Orman says.

The stock market swoon is not the time for investors to sell stocks or stop investing. Instead, they should continue to invest, month after month, dollar cost averaging their investments, Orman told me just after the market closed on Monday.

“Here’s the scoop,” Orman says. “I think people forgot that this was the exact thing that was happening in 2008. In 2008, we had far grander problems than we do today. But by March of 2009, the stock market was rising again. What makes you think that won’t happen again? Of course it will.”

Ordinary investors benefit when the stock market goes down because it makes the stocks they want to buy cheaper, she says.

“You are not traders. You are people who invest in the stock market."

"The big mistake that you make in investing in the stock market is to think you can time it. You cannot time the stock market. All you can do is spend time wisely in choosing the correct stocks or exchange-traded funds that give you a good yield,” Orman says.

It’s going to be tough for some investors to hold the course when their quarterly statements come in, showing big losses in their retirement plans and 401(k)s. The key to not panicking is remembering that short-term stock performance is not the goal of long-term investing, she says.

“You deal with that by understanding that you have been given a gift."

"This month’s contribution is going to buy more shares of what you already own. And the more shares you have, the more money you make in the long run. Don’t look at where your balance is now, look at how many shares you are getting to buy,” Orman says.

Investors with over a hundred thousand dollars to invest should concentrate on individual stocks with high yields—as long as the yields are safe. Investors with less to invest should look into exchange-traded funds with 4 to 5 percent yields, according to Orman.

Lots of investors are attracted to gold and silver. Orman says that gold is more attractive than silver at this point in time.

Isn’t she concerned about a gold bubble?

“I think that, yes, gold can go up from here. But, yes, I think we’re starting to form a bubble here. So be able to react quickly when gold starts to turn,” she says.