LODI FINANCIAL ADVISORS TALK ABOUT STOCK MARKET DROP
Christopher Olsen, a private wealth advisor with Bridge Pointe Financial Group of Lodi, offered his thoughts on what might have caused the 1,175 point drop in the stock market on Monday. Olsen cited new infrastructure spending, growing employment rates and recent tax legislation as contributing factors to the drop.
“At this point, a 1,000 point drop is approximately 4.5 percent of the market. The drop is bad, but it’s not the biggest drop in history. In everything I’ve been reading, because of the (2017) Tax Reform Act and the economy growing well, a lot less unemployment was reported last Friday. As a result, the treasury rates ticked up. Everybody was excited about that, and that seems to be the cause,” Olsen said.
“The last time we had this big of a percentage drop was August of 2011, when the U.S. debt was downgraded. There were serious concerns of confidence at that time, but this drop was based on the economy doing too well.”
Olsen advised investors to consider both their longterm and short-term goals when deciding where to place their money. Short-term goals such as purchasing a home should be funded with either cash or money stored in a bank, he said, while long-term goals such as retirement can be funded by investing in the stock market.
“As long as your investments are tied to the time frame of your goals, then this drop is not quite as critical,” Olsen said.
Financial planner Dale Immekus of Dedicated Financial & Insurance Services of Lodi, who also sits on the Lodi Chamber of Commerce’s Government Relations Committee, offered his own perspective on Monday’s point drop.
“Disappointing earnings, political acrimony, investors depending on equity for dividend income as opposed to less volatile bonds are some of the factors contributing. The market has been experiencing hypergrowth and looking for a reason for a correction. But this is a correction, not a meltdown. Investors need to stay on course with their long-term plans and not panic,” Immekus said.