Northwest Arkansas Democrat-Gazette
Markets in turmoil
The Associated Press talked with a range of analysts and fund managers about what caused Wall Street’s wild week and what it means for investors.
Is all this turmoil from one jobs report that showed wages were rising a little quicker than expected?
Ernie Cecilia,
chief investment officer at Bryn Mawr Trust: The 2.9 percent wage growth number was a standout number, but it’s not off the charts. I think we need to put things in context.
The market’s always going to overshoot either way. We went through a lot of days where equities perhaps overshot to the upside.
Is this rise in market volatility overdue?
Willie Delwiche, investment strategist at Baird: Yeah, and it’s historically normal. 2017 was an anomaly in terms of how little volatility we saw. We had eight days for the entire year where we saw stocks close plus or minus 1 percent versus the previous day. Over the past 15 years it’s a median of 65 such days. So what we’re seeing in 2018 is getting back to a historically normal pattern.
Are drops like this just something you have to accept if you’re going to invest in stocks?
Melda Mergen, deputy global head of equities at Columbia Threadneedle: This is normal for the course. If you think about the gain for the stock market, a correction is to be expected.
We still believe there is strong synchronized economic growth, not only in the U.S. but in Europe. There is definitely a good fundamental strength of the economy. We’re not, overall, worried about a recession or anything like that anytime soon.
What should older investors be doing?
Jeanne Thompson, senior vice president at Fidelity Investments: If you’re just turning 50 or in your early 50s, and you don’t plan to retire until 67, it’s still a decade or more away. That’s still a long time. You still want to invest for growth so you’re fighting inflation.
We recommend that by the time you retire, you have 10 times your ending income. So, if at the end of your career you’re making $100,000, 10 times that would be $1 million.
Is there a silver lining for investors going through this steep market slide?
Randy Frederick, vice president of trading & derivatives at Charles Schwab: For most investors it’s good for them to be reminded periodically that there is risk in this market and you shouldn’t just be buying because it’s going up. When you’ve gone 18 months without even a 5 percent pullback, it’s almost inevitable it would happen. It's not comfortable for a lot of people, but we do think it’s going to be a good opportunity for some people to put money to work.