No, this is not the time to be cashing out your 401(k)

York Dispatch editorial board
Trader Tim Sela, left, works on the floor of the New York Stock Exchange on Tuesday.

The last few years, it seemed like stocks only went one way: Up.

Thanks to the Fed's money-printing, low-interest rates and more than a few stimulus checks courtesy the Trump and Biden administrations, the market looked particularly good in 2020 and 2021.

Over those two years, the S&P 500 index of some of the nation's largest companies climbed 16% and 27%, respectively. Individual investors placed bets on Big Tech companies like Amazon, Netflix and Peloton and riskier meme stocks like AMC and GameStop. Others dabbled in largely unregulated cryptocurrencies like Bitcoin, whose ephemeral value peaked at $64,000 last November.

Alas, no good thing lasts forever.

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Since the first of the year, the S&P fell 18% while the more volatile Bitcoin shed roughly half of its value.

The wild party, it seems, is over thanks to the convergence of several interconnected events: Inflation is at a 40-year high, spurring the U.S. Federal Reserve to raise interest rates and, thus, making it more expensive for everyone to borrow money.

Meanwhile, some of those high-flying Tech stocks saw some bad news: For Peloton, it was a product recall. For Netflix, reduced viewership. For Amazon, the prospect of unionization forcing it to treat workers more fairly.

None of this has been helped by Russian President Vladimir Putin's imperialistic designs on Ukraine, resulting in a war that sent the cost of food and gasoline surging globally.

All of this has investors skittish about the future. And when investors are fearful, it almost inevitably leads to an economic retrenchment as people pull their cash out of the stock market and stuff it in their mattresses.

If you're the kind of person who routinely checks your 401(k) ... maybe you shouldn't.

But, here's the thing.

The stock market — and, indeed, the economy at large — is a fickle thing.

CNN's Fear & Greed Index, a measure of volatile market sentiment, refers to billionaire investor Warren Buffet's old saw: “Be fearful when others are greedy, and be greedy only when others are fearful.”

Right now, that indicator points to "Extreme Fear" as many investors run for cover.

As Buffett repeatedly points out, it's instructive to look at how the Dow Jones Industrial Average, our longest-running barometer of the stock market, has performed since its origins at the turn of the 20th century.

Charting the Dow, you see multiple crashes and recessions. But one truth emerges: Despite the periodic downturns, the market inexorably rises. As so many financial advisers — at least the good ones — have said, the worst thing you can do is panic sell at the bottom.

"When the market is down low," financial adviser Lori Gross told Fortune Magazine, "you're going to ride it back up. It’s just a matter of time."

As long as you've invested in solid companies that you expect to still exist 10 years from now — or, even better, a low-cost ETF that bundles the larger stock market (the S&P 500) into one basket — there's no reason to fret.

"The temptation," Buffett told CNBC in 2017, "when you see bad headlines in newspapers is to maybe skip a year. Just keep buying; American business is going to do fine over time."