A week’s worth of volatility in the stock market, with its wild swings of gains and losses, has been felt in the Golden Triangle. But not in the way you might imagine, local financial advisors say.
Going into Wednesday trading, the Dow Jones had suffered a six-day losing streak, including a pair of more than 600-point swings to start the week. On Monday, the Dow fell by 1089 points before finishing down 600 points. After a strong early rally Tuesday, the drop began again, finishing the day with a 200-point loss. Over the six-day period, stocks were down by 1,900 points, but the market roared back Wednesday, with the Dow rising 619 points on the best day for market gains in four years.
The swings in stock prices haven’t produced the climate you might expect, at least not from where area financial advisors sit. They describe the atmosphere as busy, but calm.
“We’ve definitely had more calls this week,” said Jim Ford, a financial advisor at Wells Fargo Advisors in Columbus. “But what I am seeing is more people calling looking to buy stocks cheap. After what happened Monday, there are bargains galore. There are two ways to look at these kinds of situations and a lot of our clients see it as an opportunity. I can’t think of one sell order I’ve had this week.”
Scott Ferguson, a financial planner at Financial Concepts in Columbus, said his company began contacting clients last week.
“We have been pro-active in reaching out to our clients,” Ferguson said. “Our message is that market corrections like we are seeing are very normal. Since the end of World War II, we have had 53 market corrections in the range of 10 to 16 percent. That’s roughly one every year. What’s different is we haven’t had one of these in 1,423 days, so we wanted to reach out to our clients and set them at ease.”
Ferguson said some of his clients have also viewed the abrupt, if temporary, fall in stock prices as an opportunity.
“Definitely,” he said. “There may have been a company out there that a client really liked, but the price was too high. Now, he can get into that stock at a price he’s comfortable with.”
Analysts attribute much of the fluctuations in the market to the Chinese economy and its decline in the Asian markets. The world’s second-largest economy appears to be in the midst of what many analysts consider a major market correction. China’s decision to devalue its currency produced an impact throughout the world.
“When weaknesses occur inside such a big economy as China’s, it’s unsettling,” Ford said. “When one big economy sneezes, the other economies get a cold and when you can’t see the root causes, the uncertainly doesn’t really go away. That’s what we’re seeing now.”
Both Ford and Ferguson said their client base is largely focused on long-range investments, which means the wild swings in stock prices shouldn’t dictate plans.
“If you are investing for the long-term you want to have a long-term approach,” Ferguson said. “If that’s your goal, you shouldn’t make impulsive decisions on short-term things. Focus on your goals and objectives.”
Ford said he urges his clients to show restraint during this type of volatility.
“That’s particularly true if you don’t know what’s behind the changes,” Ford says. “If there is an obvious reason, then you can analyze it and make decisions based on that. It’s something you can evaluate. But in this situation, that’s not clear and that uncertainty doesn’t go hat uncertainty doesn’t go away. It may take a while yet before we really understand what is happening in this case.”
Slim Smith is a columnist and feature writer for The Dispatch. His email address is firstname.lastname@example.org.