Stay calm when the stock market takes a dive, financial adviser says
WOODINVILLE, Wash. — Stocks tumbled Monday with the Dow recording its worst one-day point drop in history, losing more than 1,500 points at its lowest moment. Local financial experts say they can understand why people might panic.
“Any time the market reacts that dramatically in a short period of time, it’s always concerning,” said John Christianson, founder and CEO of Highland Private Wealth Management.
Christianson says when the market has gone through a long stretch of prosperity, it is only natural that the market then pulls back.
“All that this did was shock us into reality,” said Christianson.
That shock emotion is something he says people need to keep in check.
"In my own life when I make decisions in high emotions, those don’t generally work out well,” he said.
Christianson says people tend to make very bad decisions when the markets swing dramatically.
"Financial markets are volatile, they go up and down. The going down isn’t super fun, the going up is fun. On the down, don’t make any silly decisions that you’ll regret, don’t think you’re smarter than the markets because you’re not,” said Christianson.
Since you can’t control the market, he says, look at what you can control, like the fees, expenses and taxes you’re paying in your portfolio. He says maybe look at cheaper alternatives. He adds to look at other things you can control, like how much you have in stocks versus more stable investments like bonds and cash, which may help calm your fears.
"Maybe I’ve gotten a little lazy about that and it's time to rejigger that to where I can be a long-term investor and be comfortable no matter what the markets do,” said Christianson.
As for 401Ks, he says, those are generally long-term investments and the key is being comfortable with where your plan has invested your money.
The upside of an 8% drop, Christianson says, is to look at how this could be used to your advantage.
"Interesting time to be looking for and pulling together things you may be interested in buying over the long term because they’re cheaper than they were, a lot cheaper,” he said.
Overall, Christianson is pretty calm about the market plunge; he says he’s seen it all before and being smart and not emotional on days when the market plunges is the way to go.
Christianson says if you have money in the stock market, you should easily be able to answer why you have your money where you do.
He says if you can’t justify how much money you have in the market and why it’s allocated the way it is, then you need to take a closer look at your investments.