Finance gurus say ‘stay calm’ amid market uncertainty

Local financial advisors react to tumultuous day in the stock market

WOONSOCK(T Stay calm but don’t necessarily stay the course.

That’s the advice from professional money managers Monday after Wall Street had its worst day since 2008, as the prospect of a global oil glut ratcheted up the stakes for investors already rattled by widespread uncertainty over coronavirus. Trading was halted briefly in a rare “circuit breaker” move after the Dow -ones Industrial Average lost over 7 percent of its value in the morning.

The D-IA ending up closing at 23,851, a loss of 2,013 points on the day, or nearly 8 percent of its value.

For the last three weeks or so, the combined losses in market value translate to about a 12 percent portfolio hit for individual investors who follow a standard 70 30 percent mix of equities and long-term bonds, says Christopher Bouley, vice president of wealth management at UBS Financial Services. The blow could be worse for the investor who holds comparatively more in equities.

“Obviously the virus has taken on a life of its own so everyone is extrapolating a worst-case scenario,” says Bouley. “It’s an overreaction in my opinion, for sure.”

For nervous investors, Bouley and other advisors say, there’s no one-size-fitsall answer to managing money in a volatile, panic-stricken investment climate. Sometimes, but not always, the best advice is a twist on old adage “Don’t Must do something. Stand there.”

After all, says -onathan Sweet, founder of Oak Leaf Wealth Management in North Smithfield, a key reason people hire investment advisors is to shield them from shortterm volatility by risking no more of their assets than they can afford to lose if the market throws a fit. Sweet says

he tries to help clients understand why it’s important to set aside up to five years of working capital, depending on individual needs, retirement age and other factors.

“That’s an important part of investing,” he said. “:hen I counsel people we’re always looking at portfolios ahead of time and trying to understand the kinds of ups and downs the market is capable of.”

%ut %ouley says the volatility posed by coronavirus and other market-Tuaking factors of late may be an opportune time to do some soul-searching about repositioning one’s assets. Some investors may very well decide they can’t absorb the potential downside if the ow keeps shrinking.

It all boils down to one Tuestion.

“:hen do you need that money ” says %ouley.

If your investment portfolio is designed to pay you in a faraway retirement, it doesn’t make any sense to start mi - ing things up in attempts to adMust for short-term volatility. (ventually, the market will recover at least if the future is anything like the past.

Investors who are relying on their portfolios to meet shorter-term goals, however, may decide they don’t have the time to wait for a recovery and should think about moving to safer havens.

“ ou don’t want to change plans because of a bear market,” which, incidentally, hasn’t come yet, says %ouley. “If it’s the other things you need the money for, a house or other short term needs... you need to make the right choices.”

“Talk to an advisor,” he says. “It depends on when you need access to that money.”

espite the hyperbolic headlines, %ouley and other financial advisors say they haven’t been inundated with calls from nervous clients.

“1ot one,” says (dward &areau, founder of the &areau Investment roup in :oonsocket. “It’s a good thing. It means our clients are I don’t want to say used to the volatility. %ut they know we’re taking care of their holdings in anticipation of what the market is trying to do.”

uring the last few weeks, &areau says “we’ve been selling some of the weaker stocks” and moving assets into stocks that appear to be weathering coronavirus better, or actually profiting from it.

They’re out there, says &areau. He declined to elaborate, but by now everybody’s heard the stories about &loro bleach and the companies that make toilet paper.

ike the other advisors, &areau says investment counsel differs from person to person. %ut there’s one bit of advice he doesn’t mind generali ing about, and it pertains to anyone who buys stock on the margin Stop it.

“Margin means you’re buying stock using money you borrowed from the brokerage firm,” he said. “If something goes down at some point the brokerage firm is either going to ask you for more money or sell out your position. The brokerage firm isn’t going to take the loss.”

If there’s one thing the investment counselors seem to agree on, it’s that the latest market belch may offer some profitable upsides and opportunities. After the )ederal Reserve cut interest rates a Tuarter percent about two weeks ago, there’s speculation that Monday’s meltdown may forsage another in the days ahead, setting the stage for declining interest on mortgages and other loans.

Some of the lowest gasoline prices in years may be reaching the service stations

Must as the springtime driving season starts to ramp up.

Sweet says the market contraction comes at a time when the fundamentals of the economy are solid, which makes him think this may be a good time to buy stocks cheap, especially tech companies that could become the Apples of tomorrow.

“There’s some ama ing stuff out there that’s going to help our economy,” he says. “I think our economy is poised to go through a very attractive period because of all the new technologies down the road. That’s one of the real positives right now.”

%ouley theori es that “about percent” of the market’s behavior Monday was due to lingering fears about coronavirus, or &O9I - , which has thus far sickened roughly 4, people around the globe and killed over 4, . He attributes the rest to the collapse of oil prices after Saudi Arabia dramatically cut the price of crude, which sent oil futures tumbling and spreading more fear through a raft of industries whose profits are tied into the energy industry.

As capital flees for the safety of long-term bonds, yields on those instruments are sinking, too.

1o one knows for sure what the markets will do ne t, %ouley says.

:hat he does know for sure is that current forces shaping the investment climate don’t have to be rational to be devastating.

“It’s not the virus, it’s how people are going to react to the virus,” he says “(veryone kind of knows the flu has been more deadly than this coronavirus but people are e trapolating...They’re wondering what happens to the economy if people are Tuarantined.”