Advisors to Investors: Keep Calm, Buy More Stocks
The headlines may be screaming that the end is nigh for the stock market, but wealth managers are ready to calm customers’ nerves — many even suggesting clients go deeper into equities, reports The Wall Street Journal.
Advisors admit this is a time when many clients may need some hand-holding, particularly younger investors who did not experience the 2007-2009 recession.
And many wealth managers plan to help clients take advantage of the decline, they tell the Journal: Bijan Golkar, chief executive at FPC Investment Advisory, says the PE ratio of the S&P 500 is below the 25-year average, which his firm is using to “heavily” rebalance portfolios. Mike PeQueen, an advisor at HighTower, says his firm’s customers have already shown interest in boosting their equity exposure to take advantage of the drop. Joe Heider, president of Cirrus Wealth Management, says he may advise clients to move some cash into equities this week. Meanwhile, Barry Glassman, president of Glassman Wealth Services, says he’s using the pullback to do some tax-loss harvesting.
The drop follows a seven-year bull market, and this type of volatility has been the new normal for several years, advisors tell InvestmentNews. Several factors contributed to the sell-off, including a “train wreck of an earnings season,” says Phil Blancato, chief executive of Ladenberg Thalmann Asset Management. The slowdown reports out of China, dropping commodity prices and uncertainty over the Fed’s interest rate hike also contribute to investor anxiety, InvestmentNews writes.
Depending on individual clients’ reactions, it may be time to reevaluate risk tolerances, says Rose Swanger, principal at Advise Finance — but it’s also the duty of advisors to exercise their communication skills and to remind clients about long-term goals, according to the publication.