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Local financial advisers: Virus shouldn’t scare off investors

Reacting out of fear could cause damage

Despite the stock market experiencing its worst week since October 2008, local financial advisers say investors should not panic.

The Dow Jones Industrial Average tumbled nearly 1,200 points Thursday, caused by growing anxiety that the coronavirus will wreak havoc on the global economy. That was the market’s worst one-day drop since 2011.

After a big drop of more than 1,000 points on the Dow early Friday, the market regained some ground in the last 15 minutes, reducing its daily loss to 350 points. The S&P 500 fell 0.8%, while the Nasdaq reversed an early decline to finish flat.

“The panic created by the coronavirus is because of the uncertainty surrounding its economic impact. Over the long term, stocks have had the highest expected return of all investments, but in the short term, they can get bumpy,” said Jeff Starkey, a partner at Kooman and Associates, Altoona. “It feels scary in the moment, but market corrections like this are not at all uncommon. It’s just caught people off guard after months of good news.”

“There is a lot of fear from the coronavirus,” said Brian Hall, a financial adviser with Irwin Financial Inc., Altoona. “I would say a downturn in the short term should not determine your investment strategy. If you are not 100 percent into the stock market, you are not in the full decline as shown on TV,” Hall added.

Hall said the low prices could be beneficial to younger 401(k) contributors.

“If you are not planning to retire in five years, this could create an opportunity; it could be good. You can buy shares at 12 to 14 percent less than what they were worth,” Hall said.

Amy Seltzer, managing partner of Seltzer Financial Strategies, Altoona, said her office received very few calls about the stock market.

“This is because of the way we invest with protection as a major part of our plan and the way we keep our portfolios diversified beyond stocks and bonds. That means our clients feel safe in volatile markets,” Seltzer said. “We feel the correction was long overdue and the coronavirus triggered it.”

However, Seltzer urged investors to keep an eye on the markets.

“We caution people to take (the coronavirus) seriously as it continues to spread. The market hates volatility, so until a vaccine is developed or something is found to stop it, we feel the volatility will continue.”

Hall said he doesn’t see the market situation as a financial crisis.

“It will not head us into a recession; it is a typical decline. Every 12 to 14 months, you see a 10 percent decline in the market,” Hall said. “We just had an all-time high Feb. 19. We are less than two weeks from an all-time high. (Huge drops) just don’t typically occur in a week, they are usually spread out over one or two months.”

The people who are being hurt are those reacting out of fear.

“When you own stocks and the value declines, it is only a loss if you sell them. If the value goes back up, you don’t have a loss. People who are hurt are people who let emotion drive their decisions rather than long-term planning,” Starkey said.

Staying the course is the best strategy, financial advisers say.

“Stay calm and focused on your long-term goals that is why you should invest in stocks in the first place. Remember you are in it for the long term and stay calm, “ Starkey said.

“If you own high quality investments in a diversified portfolio and maintain your long-term goals, you will be absolutely fine. Stay the course,” said J.T. Tidd of Hollidaysburg, a financial adviser with Edward Jones Investments.

Next week will be critical, said Chris Fusco, partner in Fusco Riley Reismeier Financial Group LLC, Altoona.

“The coronavirus is more of an excuse in the short term. In the long term, it could hurt the stock market. The coronavirus has everyone uncertain,” Fusco said. “If we see an acceleration to over a 20 percent correction, it will be time to readjust your portfolio. If (the market) keeps going down, that would be a bad sign. If we go over a 20 percent correction, then the market moves from a slight downturn into a bear market.”

Mirror Staff Writer Walt Frank is at 946-7467.

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