Missoula Financial Markets Tank over Inflation – Fed – Ukraine
Investors in Missoula and around the globe are watching helplessly as their investment accounts drop hundreds of points a day while markets react to world and national events.
KGVO reached out to Bob Seidenschwarz at S.G. Long in Missoula to make sense out of what is happening in the markets.
Seidenschwarz counted down the factors that have crippled the markets over the past week.
“Here are the triggers, at least from a headline standpoint, first; inflation,” said Seidenschwarz. “You've got the Fed getting more hawkish, pulling back on their bond purchasing program and actually discussing bond sales into the marketplace. You also got a little news out there with Russia and the Ukraine, of course, and that is stirring the pot a little bit. And we still are dealing with the effects of the pandemic. So you've got pretty close to the perfect storm at the moment.”
Seidenschwarz reiterated the advice he gives to every new client as they start out on their investment journey.
“So as I've said after decades of doing this, I stick to this statement,” he said. “You should not be in the markets unless you've got longer term time horizons, and that’s very important. You don't get in the market to make a quick buck, to get a down payment for that house, or take that vacation. Sometimes you may hit the right numbers, but you should really be thinking about this over a five year period or longer because of exactly the type of events that we're experiencing right now.”
Seidenschwarz explained the concept of ‘dollar-cost averaging’ when it comes to investing.
“That's a consistent purchase of a specific dollar amount every month so that you take away the highs and lows that the market inevitably tends to give you throughout the course of the year,” he said. “So, right now, you're putting that $100 away every month, you're buying more shares of that same fund that may be down 10 to 15 percent year-to-date than you were at the beginning of January. That's how you get the discipline, and that's one of the rules that has proven to be very true in terms of the long term, and that’s how you win the game.”
Seidenschwarz advises anyone interested in investing to take a very long view and not to react emotionally during times like these.
“It's always important to assess what your risk tolerance is, and how you're allocated, because these types of days inevitably are going to be a part of your investing experience,” he said. “That way when I can tell a client ‘look, we’re positioned this way,’ I checked their account and in their case, they're down five to six percent and the market is down a total of 15 percent. It's because we discussed the specifics of their allocation versus being, say 100% in stocks, especially in certain sectors that are experiencing a downturn right now. So it’s very important to have an educational perspective on what could happen under what types of circumstances.”
Seidenschwarz advises anyone to seek out their investment counselor and get solid, trusted advice before reacting emotionally to the present markets.
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