October and November have not been good to investors, Monday and Tuesday were especially bad.
“If you just invested at the beginning of January, you have made almost no money depending on what market or index that you are in,” says Ryan Wilson, Senior Vice President and financial adviser of RBC Wealth Management.
At the close of the markets on Tuesday, the DOW plunged more than 550 points, the NASDAQ dropped nearly 120 points and the S & P 500 was down nearly 49 points.
Wilson says there’s several reasons for the losses, “Trade tariffs and things that are going on between the U.S. and other countries, we have the Fed (Federal Reserve) raising interest rates, tightening money supplies that’s another reason that’s given for the volatility and then we’ve had some of the tech names disappoint in some of their earnings numbers,” adding that despite that long term investors are still in the green.
He says some of the tech giants Facebook, Apple, Amazon, Netflix and Google, often referred to by the acronym FAANG, have been hit hardest but you shouldn’t assess the stock based on two days losses.
“Some of those names, even with the pullbacks they’ve had over the last call it six weeks are still up 20 or 30 percent year to date in some of those names,” says Wilson.
He says instead make sure your plan and the companies are a good fit, “What is a timeline for this investment? Am I a long term holder, five years plus? And am I going to need that capital in the next few years? Is the story the same as it was 12 or 18 months ago?” adding that if a company constantly has bad headlines, it keeps affecting the bottom line and it has a weak foundation the stock can be affected long term and you should reassess if you should keep it.
Wilson says in the past few months there have been big gains followed by dips but overall this is more of a correction and not signs of a coming recession, “Earnings are really good, our economy is really good, those are really good drivers long term of what stock prices do … every indicator that we take a look at we don’t have a very high chance of a recession in the last 12 to 18 months, we do think the waters will be choppy but the fundamental economy is still strong.”
He says the stock market is not for everyone, and there are different investment plans that aren’t as risky during volatile times.
Wilson advises every investor sit down with a financial adviser and reassess their plan before the end of the year and make sure it still works for their long term goal, “People get busy with the holidays but if we’re going to continue to have volatility like this is worth to take the time, take the time and assess what you have going on.”