Don’t fall for the hype.
Blame it on the recent interest rate hike. Or troubles in China. Or panic over whatever bad news might lurk in the next round of quarterly earnings reports. Or cutting losses. Or Punxsutawney Phil seeing his shadow. (Wait … that’s next month.) The markets are down, and that’s creating panic in some circles. Here’s sampling of the advice financial advisors have to offer as Wall Street slips on the investment equivalent of January ice.
Reach for the ‘off’ switch.
“Turn off the TV and turn on your computer,” says Peter Frawley, financial consultant and senior vice president of CoreCap Investments in the greater Detroit area. “This is not the time to listen to breaking news every five minutes.” And while you’re at it, send that heaping bowl of jargon back to the kitchen. “Listening to a TV host talk about ‘handles’ and ‘arbitrage’ is not helping you make prudent decisions. If you haven’t been doing research, you should start now,” Frawley says.
Pace yourself for the long haul.
Looking at the market with a fine-tooth microscope? Don’t. “People should not monitor the market on a daily basis,” says Robert R. Johnson, president and CEO of The American College of Financial Services in Bryn Mawr, Pennsylvania. “They should recognize that investing is a marathon, not a sprint. Look at this as a buying opportunity. Stocks are on sale. Panic selling is never a good idea. It certainly could go lower, but I’m a buyer here.”
Keep calm, and pass the ketchup.
Sandy Martin, managing director of Martin Investment Management in the Chicago area, invokes the wisdom of billionaire Warren Buffett, who once said, “When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household.” Says Martin: “If you own a piece of a business whose prospects of growing over the next 5 to 10 years seem likely … and a fellow comes along and offers to sell you at prices lower than you’d be willing to pay — why wouldn’t you take this fellow up on his offer?”
Practice your rebalancing act.
Selloffs are all too common in market slumps, but that means there are bargains out there. “With bond prices rising and stock prices declining, now might be a good time to shift some money from bonds to stocks,” says Jim Wright, a Covestor portfolio manager and chief investment officer at Harvest Financial Partners in the greater Philadelphia area. “This is especially true if your portfolio is not in line with your targeted asset allocation.”
Watch China.
Whether or not investment barons like it, the fact is this: When Shanghai sneezes, Wall Street doesn’t just catch a cold — it turns into a hypochondriac. “The market is increasingly worried that the world is about to go back into recession,” says Gary Tsarsis, a clinical assistant professor at the University of Pittsburgh’s Katz Graduate School of Business. “And the primary reason is the slowdown in China. Its 6.8 percent GDP growth is the slowest rate in 25 years. This will adversely affect most countries, in particular emerging markets.”
Weather the turmoil with money market funds.
Even if a tough year lies ahead, investors who are retired can mount a defense. “At the start of every year, it is important that retirees have at least 12 months of living expenses in money market funds,” says Ben Stewart, a Covestor portfolio manager and founder of Stewart Wealth Management in San Rafael, California. “General budget and IRA distribution planning can help retirees weather the storms by avoiding heavy selling during market corrections.”
When things look down, look up.
“The first thing you’ll want to remind yourself of is that while markets inevitably have disappointing periods, the general trend is almost always upward,” says Steve Berg, chief financial officer of O.penVAPE and a former managing director at Wells Fargo and UBS. Keep your head out of the clouds, though: “In these types of situations, it’s important to check that your investments aren’t isolated to high-risk stocks of the same variety. Consider investing in other asset classes, such as commodities or real estate, to diversify your risk.”
Bubble, bubble? No such trouble.
Since 2000, two horrendous markets have moved investors to pull out their hair (or their Donald Trump mega-tufts, if you like). But neither one has any correlation to what’s going on now, so expect no long-term slump, says K.C. Ma, director of the George Investments Institute at Stetson University in DeLand, Florida. “Today, we are not in the 2001 Internet bubble. We are not in the 2008 housing bubble. The reason why it took some time for both markets to recover was because they were ‘bubblers’ to start with.”
Say this three times fast: Weltanschauung.
While you’re untying your tongue, here’s the translation: It’s German philosopher-speak for “group worldview” and invoked by Dave Yeske. “Humans the world over are growth-seeking beings,” says Yeske, managing director at the wealth management firm Yeske Buie and director of the financial planning program at Golden Gate University’s Ageno School of Business. “That’s why economies in every place where people have any freedom of action tend to be resilient tend toward growth over the long run.” Maybe that’s what Wall Street’s worrywarts need: a brand new weltanschauung.
Adopt a beagle.
This may be the best way to chase off yet one more gloom-and-doom animal: the Wall Street bear, or at least the fear of one. “I’ve been surprised by the sharp downturn in the market,” says Jennifer Clifton, a business attorney with the San Francisco-based Viewpoint Law Group. “But I think this is just a minor setback and don’t expect it to be another recession. Stop watching the news, get a dog, take it for a walk and go long.”
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10 Tips for Keeping a Cool Head in a Market Meltdown originally appeared on usnews.com
