FLORENCE, S.C. The volatile stock market has people wondering what to do. Invest or to sell?
Several financial experts in Florence had this advice: Stay calm, stay the course and this too shall pass.
“The market is emotionally driven at this point,” said Buddy Brand with Stifel, Nicolaus & Co. Brand said he has been in the business for 40 years, and his best advice is to “hold tight and do not sell.”
“This too shall pass,” Brand said
“I’ve been in the business since 1984. It is very turbulent times. I believe a lot of it is political.”
Brand said the news media is trying to scare people.
“You need to keep things in perspective,” he said. “Filter through the noise.”
“What effect does the coronavirus have on AT&T,” Brand said. “Proctor & Gamble, Clorox, Colgate and Walmart are doing great.”
But their stocks are down too, he said.
“Be patient,” Brand said. “Right now the worst thing that you can do is touch your 401K and change things.”
Brand said just a few weeks ago the market was at its highest, and today it is down about 30 percent from that high. The Dow Jones Industrial Average dropped 2,997 points Monday, the index’s biggest point drop of all time.
“If you have funds you are not going to use for a couple of years, now is the time to buy,” Brand said.
Reginald “Regi” Armstrong, the president, client wealth manager and partner at Armstrong Wealth Management Group, said while all of the proper steps are being taken to keep COVID-19 from becoming a pandemic and keep our health system from being overwhelmed, the economy is coming to a halt.
The hit to the economy will be very sharp, Armstrong said. He said there could be a huge hit to earnings and to companies.
“Online companies will do pretty well,” Armstrong said. “Others not so well.”
He said this turbulence could last one to two quarters.
“Oil is adding to the panic,” he said.
Armstrong said that might not be too bad, as it helps the airlines, truckers and the individual consumer at the gas pump.
He said the bond market is very disorderly.
The market has seen the fastest drop ever from peak market to the bear market of 20 percent, Armstrong said, even faster than in 1929 and 1987.
“Everything is happening at a fast speed,” he said.
Armstrong said there could be a sharp recovery, but most bear markets have three legs: the first is down, the second is up and the third is down.
Armstrong said for those who buy and hold, his advice is to not let panic set in.
If your portfolio has been hurt, now is not the time to become way more conservative, he said.
Also it is not the time to jump in the market with both feet, Armstrong said. It might be the time to start adding slowly to that portfolio.
If you have a 401K, Armstrong said don’t stop adding to it.
“Be careful about making drastic moves,” Armstrong said.
“The No. 1 rule is to stick with your strategy, don’t let your emotions overrule you and get a second opinion if in doubt,” Armstrong said.
Scott Mitchell, the chief investment officer with Signature Wealth Strategies, agreed.
“Panic is not a good solution for anything, especially the stock market,” he said.
He said at Signature Wealth Strategies, they provide clients with “Signature Life Plans” that take into account market fluctuations.
He said they go over the plan in detail with clients and work the plan based on their answers to specific questions.
“We help clients reach their goals taking into account different outcomes,” Mitchell said.
He said their plans are long-term, and short-term events have been figured into their long-term plans.
“This gives our clients some comfort when we go over their portfolios,” Mitchell said.
His advice for people at all stages of their investing, whether just starting out or about to retire, is to first make a plan, and then stick to it; it can adjust later on if needed.
People need to not let their fear overtake rational thinking, Mitchell said. For some people, that could mean time to buy and for others time to hold tight.
Mitchell said the most important thing is for investors to not make emotional decisions about their investments but to make rational decisions.
“A plan gives people a road map for times like these,” Mitchell said.
He said the calls he has received since the market became so volatile have been about 4 to 1 asking should they buy now.
The Federal Reserve’s announcement Sunday to cut baseline interest rate range to 0 to 0.25 percent was a preemptive move to protect the economy in order to protect the economy from the impact of the coronavirus outbreak.
Mitchell said it is two-fold. It makes sure the markets are behaving properly. He said it will reduce the rates for people who want to purchase a home and for small businesses to help them manage short-term losses.
Rick Saunders, the president and chief executive officer of First Reliance Bank, said people don’t seem to be as concerned as the media indicates.
“This is national media frenzy,” Saunders said.
He said things have been relatively quiet here, but those who have been asking questions are asking if now is the time to start investing in the stock market.
He said people need to consider where they are in their life cycle and their career cycle before making decisions.
Saunders said he wouldn’t advise people to make short-term investment. He would tell people to wait until the market starts to stabilize.
“When the Federal Reserve makes a rate cut on the weekend, that is cause for concern,” Saunders said.
He said they are trying to offer businesses loans at very low interest rates. He said a lot of industry will be impacted by the coronavirus, especially where there is a lot of travel and entertainment in the area.
Saunders said the economy was good before the virus hit. He said he doesn’t think the situation now is anywhere close to 2008.
“The stock market doesn’t like uncertainty,” he said.
Saunders said we need to stay as safe as we can. He said in his opinion we will look back in 60 days and won’t believe this happened.
“These types of viruses usually play out,” he said. “By then we will certainly have a handle on it.”
Saunders said we need to be prudent about our health and managing our money.
He said the banking system is more solid than ever.