Thursday was the worst day Wall Street had experienced since Oct. 19, 1987, and local financial advisors are fielding calls from their clients who are worried they are going to lose their investments.
U.S. stocks plummeted into a bear market on Thursday, with the S&P 500 falling 9.5%, the Dow losing nearly 10% and the Nasdaq Composite dropping 9.4%, a day after President Donald Trump announced a ban on travel from Europe.
Financial advisors such as Bryan Hickingbottom, branch manager at Raymond James in Lodi, said he is telling his clients not to panic in the wake of the coronavirus pandemic.
“The concern out there is that we’ve never seen something move this fast before,” he said. “This is going to be short-term, but I wouldn’t rush out and sell my stocks. It does no good to panic.”
Hickingbottom said about one-fifth of his clients are worried about their financial future, and those that have saved for long-term planning should not have concerns about their investments.
However, he said those that have planned for the short-term should not have invested in the market.
“It depends on the type of client and their life cycle,” he said. “If they’re planning for retirement, or even early retirement, there’s no need for concern. But if they’re younger and don’t need the money to live on, I’d say to take the opportunity to buy into everything.”
Hickingbottom said even though companies like Disney, Home Depot, MicroSoft and Apple are seeing stocks drop this week, they are not going anywhere and will bounce back like they have in the past when the market has taken a drop.
He recalled the fourth quarter of 2018, which he said was just as ugly as the recent coronavirus dip on the market. In December of that year, the market dropped as much as 9 %. However, a month later it regained its footing and increased by 30%.
“This is a black swan event that came out of nowhere,” Hickingbottom said. “This shall pass, and if you’re panicking, maybe you need to reassess your strategy.”
Conversely, Chris Olsen of Ameriprise Financial Services, said he has received just a few calls from clients inquiring about the strength of their investments this week.
“I’ve had three people who wanted to buy stocks this week,” he said. “If you can stomach some of the things going on and aren’t afraid of risk, right now is a terrific time to buy. If what is going on is causing panic, then you have to get out of the market.”
Olsen said he hasn’t fielded a lot of calls because Ameriprise undertakes comprehensive financial planning for all its clients — meaning the majority of people the firm serves are preparing for the long-term future.
He said for those who have been buying and investing consistently for a number of years, the market’s recent activity won’t have a bearing.
“It’s been amazing how calm my clients have been,” he said. “People just need to keep their wits about them, and if they’ve planned for the long term, they should be fine.”
Even the California Public Employees Retirement System has ensured is pensioners that there is nothing to fear during the economic downturn.
In an email to the New-Sentinel, CalPERS said it was a long-term investor, which remains focused on strategies looking ahead as far as 30 years.
The agency said it has planned for a downturn and is now implementing a plan to keep beneficiaries’ investments from remaining intact.
Strategies have included lowering the discount rate from 7.5% to 7% over the last three years, as well as shortening the amortization period for employers to pay their unfunded liability from 30 years to 20, which will save millions over the long term.
The agency also received $10 billion from the state to strengthen its fund.