Business & Finance

4 Things You Shouldn't Do Right Now

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“Courage is being scared to death, but saddling up anyway.”

 – John Wayne

BASKING RIDGE, NJ- U.S. stocks ended a defensive week in the red as investor sentiment deteriorated in the face of fresh worries out of China. For the week, the S&P 500 fell 5.77%, the Dow lost 5.82%, and the NASDAQ slid 6.78%.[i]

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When markets take a dive, it’s natural to worry about what’s happening and where markets will go next. However, part of being a stock investor is taking market swings in stride. Now is the time to stay cool-headed and focused on your long-term goals. On that note, here are 4 things that you definitely should not do after last week’s market pullback:

Don’t listen to the talking heads. The selloff is happening in the middle of a seven-year bull market. As of Friday, the S&P 500 has gone 1,418 calendar days without a 10%+ drop (between 10/3/11 and 8/21/15).[ii] Regardless of what the media is saying, the S&P 500 is down just 7.51% since its peak in mid-May.[iii] Markets experienced a similar selloff in September and October of last year. However, the talking heads have taken this widely anticipated pullback and made it sound like 2008 all over again. Remember – the media’s goals are not aligned with yours. They want to keep viewers glued to their televisions and newspapers, waiting for the sky to fall. Out in the real world, we’re taking a look at the numbers behind the selloff and making prudent adjustments where we feel it’s necessary.

Don’t panic and hit the eject button. Corrections are a normal part of market cycles. Since 1927, the S&P 500 has experienced pullbacks of 5% or more about every 3.5 months.[iv] While the past can’t predict the future, research shows that panicking and exiting the market is often the worst thing you can do when markets swing. Investors are notoriously terrible at picking market tops and bottoms; since periods of high growth often occur during turbulent times, investors who sell off and sit on the sidelines frequently miss out on the good days.

For example, an investor who stayed fully invested in the S&P 500 between 1995 and 2014 would have experienced a 9.8% annualized return. However, if they had traded in and out of the market, missing just the 10 best days of the market, their return would have plummeted to just 6.1%. Six of the 10 best days of the S&P 500 fell within two weeks of the 10 worst days.[v]

Don’t think like a day trader instead of an investor. Stock markets are driven by fear and greed. Right now, traders are in full-on fear mode and are selling off indiscriminately at any hint of bad news. Long-term investors are taking a look around and seeing what opportunities the pullback is offering.

Don’t get complacent. Pullbacks offer you the chance to ask yourself if you’re honestly prepared for a correction. If you have a prudent strategy and a well-diversified portfolio, then you’re better prepared for a potential correction. We don’t know whether the current selloff is a short-term blip that will reverse in a few days or the beginning of a deeper slide. However, domestic indicators are trending positively, and we believe that there is room for a resurgence.

We are keeping a very close eye on markets worldwide and will update you as needed during the evolving situation. While we can’t predict where markets will go in the next days and weeks, we focus on in helping clients manage their wealth in many market environments.

 

HEADLINES:

Weekly jobless claims rise more than expected. The number of Americans filing new claims for unemployment benefits rose more than projected last week though the underlying trend is consistent with continued labor market improvement and the previous week’s claims were revised downward.[i]

Housing starts boom. Groundbreaking on new homes rose in July to the highest level in nearly eight years. Builders ramped up activity on single-family homes, indicating that they expected significant demand later this year.[ii]

Inflation rises steadily. A measure of inflation, the general increase in the cost of goods and services, rose slightly in July, supporting expectations of an interest rate hike this year.[iii]

Existing home sales rocket to eight-year high. Resales of U.S. homes increased more than expected in July, rising 2.0%, and indicating that the housing market has legs.[iv]

GOLF TIP: Don’t Flop the Flop

The flop shot, a short pitch with a high trajectory and soft landing, is one of the most technical and satisfying shots for golfers to get right. If you find yourself struggling to get your flops up and over hazards without going too far or landing too hard, try this alternative technique:

Weaken your off-hand grip by turning your hand so that your palm faces upward toward the sky. This weakened grip will help the clubface remain open at contact, giving the ball that short, sharp trajectory without adding too much power. Fine-tuning this shot will give you a lot of options for dealing with short chips in the rough as well as finicky shots with short greens.

-Tip courtesy of Matt Swanson | Golf Tips Mag[i]

[i] http://www.foxbusiness.com/economy-policy/2015/08/20/weekly-jobless-claims-rise-more-than-expected/

[ii] http://www.cnbc.com/2015/08/18/us-housing-starts-july-2015.html

[iii] http://www.cnbc.com/2015/08/19/us-consumer-price-index-rose-july-2015.html

[iv] http://www.foxbusiness.com/economy-policy/2015/08/20/existing-home-sales-rise-to-eight-year-high-in-july/

 

[i] http://finance.yahoo.com/q/hp?s=%5EGSPC&a=07&b=17&c=2015&d=07&e=21&f=2015&g=d

http://finance.yahoo.com/q/hp?s=%5EDJI&a=07&b=17&c=2015&d=07&e=21&f=2015&g=d

http://finance.yahoo.com/q/hp?s=%5EIXIC&a=07&b=17&c=2015&d=07&e=21&f=2015&g=d

[ii] http://www.reuters.com/article/2015/08/23/us-global-economy-idUSKCN0QS0EG20150823

[iii] http://www.marketwatch.com/story/5-reasons-oil-is-sliding-toward-40-a-barrel-2015-08-20

[iv] http://finance.yahoo.com/news/china-fears-global-growth-doubts-114435763.html

About Wealth Financial Partners, LLC

Wealth Financial Partners is an independent retirement planning and wealth management firm based out of Basking Ridge, New Jersey with expertise in financial life planning including investments, long-term care insurance, life insurance, 401(k) rollovers, retirement planning, tax planning and wealth conservation. For more information about Wealth Financial Partners, LLC, (877) 714-2362

106 Allen Road, 1st Floor, Basking Ridge, NJ 07920  walter@walterpardo.com

Securities and advisory services are offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Wealth Financial Partners and IFG are unaffiliated entities. OSJ Branch: 12671 High Bluff Dr. Ste 200 San Diego, CA 92130 licensed in: CA, FL, GA, KS, MN, NY, NJ, IL, PA, OH, SC, CT. 

Information provided is from sources believed to be reliable however we cannot guarantee or represent that it is accurate or complete. Because situations vary, any information provided on this site is not intended to indicate suitability for any particular investor. Hyperlinks are provided as a courtesy. 

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

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