It’s been a roller coaster ride for stock traders, buyers and sellers. On Monday, the Dow Jones’ industrial average took its largest single-day point drop ever. By Tuesday, it gained 567 points, or 2.3 percent, rallying nearly half of the 1,175-point hit it took the day before.
Rockford-area financial advisors stressed Tuesday that investors should stay focused on the long game and not let recent volatility change their overall investment strategy. Here are three things they say investors should know in the wake of market swings.
1. Don't be afraid, we were due for a market correction
“It was long overdue. After 2017, it was so calm. We had gone the longest period of time without even a 3 percent correction.” — Jon Aldrich, president of Focus Financial Advisors, Inc. in Rockford
“People sort of got accustomed here, over the last year, where they’re starting to think it only went up. What we have seen over the last year and a half ... it picked up a little bit every day for the most part. That’s really abnormal. This isn’t anything really too scary. We knew it would happen at some point.” — Brent Brodeski, chief executive officer of Savant Capital Management in Rockford
2. Stay the course
“What markets do in the long run, they go up for the most part. In the short run, it’s pretty unpredictable. It’s kind of a reminder that markets do have risks,” Brodeski said.
“The factors that have driven the market to all-time highs are still there. I would expect them to continue to support the market despite recent declines." — David M. Cyrs, senior partner and president of CYRS Wealth Advisors LLC in Rockford
“It’s not going to be record highs every day. It’s going to keep growing but a little bit more conservatively. It’s going to be ups and downs every day but not like the last year. In general, I think it’s going to continue with a positive turn." — Luis Romero, associate professor of economics, business and accounting at Rockford University
“We’re not making drastic changes to allocations. We’re not panic selling. Nothing fundamental has changed," Aldrich said.
3. Don't try to time the market
“Frankly, the market commentators who say they know what’s going to happen next week are just talking. I’m confident markets will continue to deliver good returns over time. I’m not losing any sleep over this. It’s kind of business as usual," Brodeski said.
"A lot of publications would, I suppose, lead people to that conclusion ... That they can time market ups and downs. There’s no scientific financial data to prove that. We stay away from that," Cyrs said.
“The U.S. economy is stronger. My recommendation is to hold securities because you can see that they are influenced by companies. Big corporations are taking advantage of President Trump’s tax cuts. If you see the profits from corporations, they’re performing well and they are making money. Also, the trade associations are going to improve the U.S. economy,” Romero said.
Susan Vela: 815-987-1392; [email protected]; @susanvela