Baer Wealth Management

Cobb Financial Advisor, Economist React to Stock Market's Fluctuation

Marietta Daily Journal:

By Ricky Leroux

Investors took a hit early Monday as stock prices saw a significant decrease, but in the afternoon, the market began to climb back after the initial decline, an example of why one local financial
advisor said he told his clients to stay the course.

Kenneth Baer, managing partner at east Cobb’s Baer Wealth Management, said Monday morning his firm had gotten a few calls from clients concerned about the market, but he and his staff attempted to reassure them.

“This is just part of the risk of owning stocks,” Baer said. “This is expected to happen. It’s not a matter of if, it’s just a matter of when. You have to understand and accept this risk with a
part of your portfolio if you want to achieve return over time.”

Baer said he’s told clients to “stay the course” and be disciplined in their approach to investment.

“That’s part of what we do here is to act, really, as a coach,” he said. “We’ve got a game plan, and we’re going to stick to that game plan. Now we might make adjustments down the road, but as of
right now, we’re going to make sure that we stay disciplined.”

Days like Monday are an example of why investors need a diversified portfolio, Baer said.

“To me, it’s just a blip on the radar,” he said. “Whether it lasts longer or goes deeper is unknown, but that’s why you don’t have a portfolio that’s 100 percent stocks. You have a portfolio that’s a mixture of stocks and bonds, and bonds have done well over the past few days and are doing well (Monday).”

Roger Tutterow, an economist and professor at Kennesaw State University’s Coles College of Business, said Monday morning’s drop in prices is simply a “market correction” after years of growth, but that doesn’t make it more palatable to see such a decline.

“It’s painful to watch for anyone,” Tutterow said. “We see that this dropped, really you’ve lost well over 10 percent of your value or 10 percent of the prices between the corrections we had late
last week and (Monday morning), but you also have to put things in context. We had a really strong run in the broad market from the summer of 2009 to date. Over long periods of times, these days of
volatility tend to wash out a little.”

Because it’s difficult to outguess the market in terms of timing, Tutterow echoed Baer’s comments, saying investors should keep a diversified portfolio and “ride the market” to benefit from the
recoveries that follow the downturns.

“The big worry I have is that many times when you see these kinds of events, after a lot of the damage is done, people sell their stock, and so they absorb the downturn, but then they’re not in place when there is a recovery,” he said. “In particular, during the market correction of 2008-09, there were a lot of investors who panicked toward the bottom and got out and so they absorbed the losses, but then they were not in place when the market started recovering in the
summer of 2009.”

Tutterow said investors who don’t need cash in the near term should try not to get distracted by these kinds of downturns and instead, focus on the silver linings.
 

“Remember that when prices go down, it means that there is an opportunity to buy,” he said.

 

If You Got a Flat Tire Today, Would You Sell Your Car Tomorrow?

You’ve been driving around that dream car you’ve always wanted. At work, you’ll volunteer to drive to lunch so your co-workers can admire your new ride. Every weekend, like clockwork, you spend time cleaning the car and making sure it is shined. After all, you have worked hard and saved your money to make your goal a reality.

If you suddenly got a flat tire one day, would you be tempted to sell your car?

Let’s face it – the month of August has been a tough one for most people who are invested in the stock market. The Dow just suffered two historic days of losses. On Monday, the Dow plunged about 5% shortly after US markets opened. The index clawed back many of these losses intra-day but still ended the day down almost 600 points. That was on the heels of Friday, when the index lost about 3%.

In fact, the Dow, Nasdaq and S&P 500 each dropped by roughly 6% last week. These losses are tough to stomach. Fear and uncertainty in the global markets have caused them to get run through the gauntlet as well.

Markets adjust to minute-to-minute changes based on new information. That’s part of the reason why, in spite of yesterday’s losses, US markets initially opened Tuesday up about 2.5%.

But none of this really matters assuming you have long-term investment goals. You don’t need to react. You can’t control what happened in the market last week, or what will happen this week. But you can control your long-term goals and investment strategy. You can control how diversified you are so that the type of volatility we have experienced recently doesn’t tempt you to abandon your plans.

Are you ready to start a real conversation? Visit our website or call (770) 984-2312 and allow us to help you navigate through these uncertain times.