Local Brokers Say 'Stay The Course'
July 28, 2016 at 4:25 p.m.
The numbers are initially shocking - a one-day drop of the Dow Jones industrial average of 512 points.
But for investors, many of whom have their retirement savings heavily invested in the stock market, the advice from area brokers and investment counselors is, "stay the course, think long-term."
According to Craig Tidball of Edward D. Jones & Co. in Warsaw, the 6.4 percent decline in the market yesterday emphasizes the need to look past the temporary fluctuations and concentrate on strong companies and a strong economy.
"It depends on the approach you take to the stock market," Tidball said. "We encourage investors to buy quality and long-term. People should just stay the course and ride this out."
Denny Reeves of Lake City Bank concurred, saying this may be the first experience many first-time investors have had with a volatile market.
"We think yesterday was hard on everybody. But for millions of average investors, this may be their first experience with a volatile market that is correcting itself," Reeves said.
Rick Pearl of First National Bank said he is also advising his clients to maintain a patient, wait-and-see attitude.
"We're advising clients to hold tight and be patient. If they do have any gains, they may want to cash those out, but primarily to maintain their long-term focus, their principles and their sound rules of investing," he said.
The 512-point drop was the second largest in history, with the 554-point drop on Oct. 27, 1997, holding the dubious record. The Dow Jones Industrial Average consists of 30 major American companies. Monday's drop to 7,539.07 represents a decline of 6.4 percent of the market's value. Overall, the market has lost 19.3 percent of its value since reaching a high of 9337.97 on July 17.
"We had such a large run-up in the market that we had to have a correction sooner or later," Reeves said.
Pearl said the drop, while expected, was surprising in its speed and wide-ranging characteristic.
"Most of us anticipated a correction, maybe not this much this fast," he said. "There's a lot of concern out there and confidence."
Both Reeves and Tidball see a silver lining to the market's decline, particularly for those long-term investors, with 401k accounts and investments in mutual funds.
"They (401ks) are an investment that is focused on the long-term," Reeves said. "Those people (401k investors) are as well off as anyone. Those funds are managed by seasoned professionals, who will recognize the good buys that are out there."
Pearl, however, is not advising his individual investors to buy at the moment.
"I'm not advising clients to get back in right now. I think it's best to wait and let the market stabilize before jumping back in," he said.
Tidball said there are several factors that led to yesterday's steep drop, but laid the primary responsibility on the economic crisis in Russia and controversy surrounding President Clinton.
"As long as we have uncertainty in Russia, the market is going to be volatile," he said. "It's strange, though, Russia had less than 1 percent of the world gross domestic product, but the uncertainty surrounding its economy, as well as Clinton's woes, make investors jittery." [[In-content Ad]]
The numbers are initially shocking - a one-day drop of the Dow Jones industrial average of 512 points.
But for investors, many of whom have their retirement savings heavily invested in the stock market, the advice from area brokers and investment counselors is, "stay the course, think long-term."
According to Craig Tidball of Edward D. Jones & Co. in Warsaw, the 6.4 percent decline in the market yesterday emphasizes the need to look past the temporary fluctuations and concentrate on strong companies and a strong economy.
"It depends on the approach you take to the stock market," Tidball said. "We encourage investors to buy quality and long-term. People should just stay the course and ride this out."
Denny Reeves of Lake City Bank concurred, saying this may be the first experience many first-time investors have had with a volatile market.
"We think yesterday was hard on everybody. But for millions of average investors, this may be their first experience with a volatile market that is correcting itself," Reeves said.
Rick Pearl of First National Bank said he is also advising his clients to maintain a patient, wait-and-see attitude.
"We're advising clients to hold tight and be patient. If they do have any gains, they may want to cash those out, but primarily to maintain their long-term focus, their principles and their sound rules of investing," he said.
The 512-point drop was the second largest in history, with the 554-point drop on Oct. 27, 1997, holding the dubious record. The Dow Jones Industrial Average consists of 30 major American companies. Monday's drop to 7,539.07 represents a decline of 6.4 percent of the market's value. Overall, the market has lost 19.3 percent of its value since reaching a high of 9337.97 on July 17.
"We had such a large run-up in the market that we had to have a correction sooner or later," Reeves said.
Pearl said the drop, while expected, was surprising in its speed and wide-ranging characteristic.
"Most of us anticipated a correction, maybe not this much this fast," he said. "There's a lot of concern out there and confidence."
Both Reeves and Tidball see a silver lining to the market's decline, particularly for those long-term investors, with 401k accounts and investments in mutual funds.
"They (401ks) are an investment that is focused on the long-term," Reeves said. "Those people (401k investors) are as well off as anyone. Those funds are managed by seasoned professionals, who will recognize the good buys that are out there."
Pearl, however, is not advising his individual investors to buy at the moment.
"I'm not advising clients to get back in right now. I think it's best to wait and let the market stabilize before jumping back in," he said.
Tidball said there are several factors that led to yesterday's steep drop, but laid the primary responsibility on the economic crisis in Russia and controversy surrounding President Clinton.
"As long as we have uncertainty in Russia, the market is going to be volatile," he said. "It's strange, though, Russia had less than 1 percent of the world gross domestic product, but the uncertainty surrounding its economy, as well as Clinton's woes, make investors jittery." [[In-content Ad]]