The stock market ended a volatile week on Friday, with three major US indexes falling as investors were gripped by concerns such as inflation, the Fed’s fight against it and fears of a severe recession.
As confidence was also shattered, financial experts advised investors not to panic, but to think about long-term strategies instead.
The Dow Jones Industrial Average DJIA, -2.82%, ended down 981 points, or 2.8%, to 33,811.40. Friday’s performance was the worst daily decline in the index since October 28, 2020, according to the Dow Jones Market.
Meanwhile, the Nasdaq Composite COMP index, -2.55%, fell 2.6%, and the S&P 500 SPX, -2.77% lost 2.8%.
TGIF, really.
See also: “Waiting for the perfect moment may not be the best strategy”: 3 things investors should do when stocks collapse (again)
Of course, some annoyed retail investors could already say that things were going that way.
Nearly 44% of people say the market is moving downward, according to the latest weekly assessment of sentiment by the American Association of Individual Investors. That’s almost 14 percentage points above the historical average of 30.5% for bearish sentiment in the current tracker.
On the other hand, nearly 19% said they were in the mood for the week ending April 20th. This is an increase of 15.8% read a week earlier. But it was May 2016, when the uptrend in the current tracker did not exceed 20% for two consecutive weeks.
Meanwhile, six out of 10 investors expect increased market volatility, and seven out of 10 say they are worried about a recession, according to a Nationwide poll released earlier this week.
In the same survey, approximately four out of 10 investors (44%) said they felt more confident in their ability to protect their finances with each impending decline, and 38% said they felt more confident in their ability to invest in the stock market.
It is not as if retail investors have a monopoly on the market side. According to Bank of America, investors withdrew $ 17.5 billion from global stocks last week. This ebb is the biggest weekly move for outings this year, they noted.
The difference is that regular investors who are newer to the markets – and may have started during the pandemic – may not have the same resources or risk tolerance to keep their belly up during volatile times for more sophisticated investors. or institutional investors.
That’s where it’s important to catch your breath and avoid doing something drastic, experts say – especially as the recession talks continue.
First, this is the short story.
“While sustained inflation and a more aggressive Fed pose a risk to the economy and financial markets, the recession over the next 12 months is not our main case,” wrote Solita Marcelli, chief investment officer for America at UBS Global Wealth Management.
The economy may grow even with a series of interest rate hikes that investors are preparing for, and the results for the first quarter are “generally good,” Marcelli said in a note.
Overall, there is an exception, such as Netflix NFLX, -1.24% this week, accounting for 200,000 net subscriber losses when analysts hoped to add a 2.5 million subscription.
It also has a long history to remember. Think broadly and think about the long game of investing during downturns and volatility attacks, said Scott Bishop, chief executive of wealth solutions at Avidian Wealth Solutions, based in Houston, Texas.
The bad mood of retail investors, expressed in surveys and sentiment, is in line with what he is hearing from his clients at the moment.
However, Bishop says that if people think it’s time to adjust strategies or reduce losses, “It’s time to make changes to your portfolio. You don’t have to make big changes. ” For example, this means that it may be time to reconsider distributions, incur losses to collect tax losses. “If you invest your portfolio based on titles, you will always lose,” he said.
The pandemic seems to have lasted much longer, but only about two years have passed since the bottom of the COVID-19 market. Then there’s the second part of the story about people staying in the market instead of pulling.
At a time like this, it’s definitely worth remembering the next chapter in this story, Bishop said. After all, the people who experience the most financial pain are those who “take extreme action, binary action, get in or out.”
Add Comment