A lackluster jobs report released on Friday led to a major stock market sell-off on Monday.
Tuesday showed signs of a possible bounce-back as the Dow Jones Industrial Average finished up 0.76%, while the S&P 500 was up 1.04%, and the NASDAQ Composite was up 1.03%.
So, was Monday’s slide (and Tuesday’s positive news) a bump in the road that in the end won’t really mean much, or the tip of an iceberg for more volatility in the coming days or weeks?
Investigative Reporter Donovan Myrie, Ph.D, sat at down Tuesday with Certified Financial Planner Nancy Hecht of the Certified Financial Group Inc. in Altamonte Springs and asked her what the sell-off means to the average person.
Here are the takeaways from their interview.
Myrie: “In the last couple of days, there’s been market volatility -- something to be concerned about, something to note, or something to not worry about?”
Hecht: “I would say, not be concerned about it. Not to worry about it. We are sort of due for a correction, and it looks like now it’s happening, so it’s nothing to be concerned about…. a lot of people save and invest through their corporate plans, payroll deducted, and a lot of those investments hit their mutual funds within their 401 Ks on Friday and Monday, and everything was on sale. And you know, people love when the markets are up. If you’re accumulating or adding money regularly to your accounts, you want the markets to be down. You want to be able to buy on sale. For some reason, we like buying everything on sale, except for investments.”
Myrie: “And down is a good thing, but not too down. Correct?”
Hecht: “Correct. Down is good when you’re buying…So the normal ebb and flow is when they do go up a lot, there will be a correction, and things will come back down to a more affordable level, and that’s what people need to keep in mind. You want to be able to buy your mutual funds when they’re affordable. You don’t want to be buying at the top. You want to buy as close to the bottom as possible.
Myrie: “Interest rates. Have we gotten to the point where interest rates need to start gradually coming down?”
Hecht: “Yes, they do. We had 11 rate hikes in a very short period of time. It did knock down the price of housing, which was going crazy, and now houses are becoming more affordable. But with the rates still being where they’re at, things are still very expensive, and people are still finding it a hard time to purchase larger items that they need or want to purchase.”
Myrie: “Is this a political thing, or is it, just, as you said, a course correction?”
Hecht: “Well, it’s trying to be sold as a course correction. You know, there’s still been comments that people are spending too much money. I think people are spending too much money not because they have extra money to spend. It’s because everything’s more expensive. And I think the tide is starting to turn with the fed in that direction that, yes, people are spending more money because they have no choice. And, you know, things have slowed down, so they (the Fed) have to start reducing rates. But as much as the Fed says that they want to be apolitical, I’m sure there’s some little bit of non-apolitical decision making.”
Myrie: “Do you think we’re going to slip into a recession?”
Hecht: “I’m not feeling recession. I’m feeling maybe close to but stopping a little before we officially get into that. But who am I but a little CFP!”
Hecht: “But you know, try not to look at your investment accounts every single day. You know, maybe once a month, once a quarter. Take some of the anxiety out of it, and just remind yourself that if you’re accumulating and the markets are down. You can buy on sale, and that’s a good thing.”
Interview with Nancy Hecht, Certified Financial Group, Inc.