The U.S. stock market has erased its gains for the year, as all the major stock indexes suffered sharp back-to-back losses in the days before the Thanksgiving holiday. How are investors reacting? How should YOU be reacting? Paul Fain, president of Asset Planning Corporation, reviewed recent market performance in an interview for WBIR-tv, NBC’s Knoxville Affiliate.
WHAT IS CONTRIBUTING TO THIS MARKET PULLBACK?
- Tech stock concerns (FANG: Facebook, Amazon, Apple, Netflix, Google are off 20-40% since their summer highs)
- Slowing global economy
- Corporate debt worries (rising interest rates increase the cost of borrowing)
WHAT SHOULD INVESTORS DO NOW?
Go back to basics:
- Revisit your goals
- Match your timeframe (keep sufficient cash on hand for short-term goals)
- Review your risk tolerance
- Rebalance (set your diversification targets then buy low, sell high)
WHEN INVESTMENT RETURNS ARE WEAK OR BAD, DOES THAT TEND TO CLOUD OUR JUDGEMENT?
Generally, yes. Control what we CAN control – financial planning hero, Dick Wagner, CFP®, JD used to say:
- Save More (low returns may require more savings)
- Spend Less (or be willing to dip into principal)
- Don’t Do Anything Stupid! (don’t double down with speculation/fast money)
If you would like investment advice specific to your situation and risk tolerance, we would love to help you with asset management! Contact us today.
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