Another disastrous day on Wall Street means another disastrous day for investors. The Dow closed down at 545 points, that’s in addition to Wednesday’s huge 832 point drop. With stocks turning south and rising interest rates, investors, especially seniors with 401k plans are beginning to sweat but local experts are recommending investors sit tight.
Chris Clapinski, a financial advisor in Palm Desert, sits in his office, staring at a computer screen filled with red, a sight he hasn’t seen in a while.
“The red means that the position is down for the day and the green means it’s up,” he explained.
Federal Reserve Chair, Jerome Powell came out on Tuesday with comments that the economy is “unbelievable,” and “the best economy he’s ever seen.”
Financial advisor Brian Amidei attributes raised interest rates to those comments. Creating a domino effect of worries for Wall Street. Now, those worries are transferring to investors, especially those with 401k plans.
“On the short term, it’s going to have an effect on the value of your portfolio,” Clapinski said.
Some investors have seen thousands of dollars in losses over the past few days.
“The market correction, or what we’ve seen over the past four or five days, has taken away the gains that we’ve seen over the last six months,” Clapinski said.
Amidei is telling all of his Palm Desert clients with 401k plans not to sell yet.
“I would maintain your long-term strategy, your long-term outlook and I think you’re going to be perfectly fine,” he said. “The stock market is kind of like going up an escalator, throwing a yo-yo up and down. The yo-yo up and down is the daily volatility of the market, however the market over time has traditionally gone up over time like an escalator has.”
Clapinski said it’s key to stay patient and stick with to an investment thesis.
“If you feel that you’re taking on too much risk, you will have enough time to see out of your riskier assets in the next couple of weeks when the market bounces back a little and you’re not taking it on the chin for the full trade off in the last two days,” Amidei said. “I have money invested in the market too and I’m not making any changes.”
Fun fact (not so fun for him): Jeff Bezos, the CEO of Amazon, lost $9 billion in the past few days. Of course, he’s still worth $151 billion but it goes to show, everyone is taking a hit.