Despite recent trends, investors say volatile stock market not uncommon

Over the long haul, the stock market is a place for steady growth for most investors. But ups and downs over the past year fuel speculation that the bull market of the past decade is about to turn into a bear. (MGN Online)

A recent CBS News report revealed that, for the first time since the 1940s, Americans on average are reaching retirement age in worse financial shape than their parents did.

An estimated 10 million people over the age of 65 are still working, a number that has more than doubled since 1985.

So, how do you reverse that trend?

Over the long haul, the stock market is a place for steady growth for most investors. But ups and downs over the past year fuel speculation that the bull market of the past decade is about to turn into a bear.

That’s particularly disconcerting for young people just beginning to save. An entire generation of young adults probably won’t remember the financial crisis of 2008, when risky bank loans for real estate and unrestricted, computer-drive trading sent the financial markets into a free fall. The Standard and Poor 500 Index lost nearly 40 percent of its value, the Dow Jones Industrials almost 34 percent. Employers asked people to work without pay. And it took years for stock portfolios to recover.

About a year ago, it looked like it might happen again. The Dow fell eleven hundred points amid concerns over a bad jobs report. Over the course of 2018, the market clawed its way out of that hole. But then, just before Christmas, the bottom fell out. The market lost almost 17 points of its value in the fourth quarter and finished down almost seven points for the year. It was the first time the market had three quarters of growth and still finished the year lower than where it began.

“We’re still seeing the same trading patterns in 2019 that we say in 2018,” Median Equity Partners executive Johnathan Corpina told CBS. “And rightfully so. Nothing changed over the New Year. We have government shutdown. We’re talking about tariffs. We have large swings in oil prices. There’s plenty of geopolitical issues that are out there.”

“Right now, it’s interesting. They’ve never been through volatility like this,” Jefferson City investment counselor Travis Ford of the Wallstreet Group told KRCG 13 when asked about the reaction of young investors. Ford said he spends a lot of time trying to reassure those investors that the roller coast is nothing new.

“We get tied up in this emotion,” added John Taylor of Edward Jones Investments in Jefferson City. Taylor said even corrections of ten value points get taken in stride. The short message: Don’t sell - history is on your side. Taylor said the economy is still strong, and that’s key.

It’s a different level of fear for investors at the doorstep of retirement, those with 401k accounts invested in the stock market. A crash could be devastating for anyone poised to cash out.

“There are conservative options inside that 401k,” Travis Ford reminds us. “bonds, CD’s, annuities, money market funds. And, if you’re over 59 years old, in most cases, you can move money out of your 401k into something more conservative, if the 401k options don’t cover what you need.”

“I think it’s a matter of your risk tolerance,” adds John Taylor. “You really need to talk to your financial advisor and determine what your risk tolerance is.”

Taylor says the old standard of using your age as the percent of your total investment with a guaranteed return doesn’t generally apply anymore, so investors should ask lots of questions.

The stock market showed significant recovery in January, and got more good news at the beginning of February when the federal reserve backed off plans to increase interest rates at least two more times in 2019. Now, investors have their eyes on March, which begins with a deadline for the U.S. and China to reach agreement on tariffs, and ends with the deadline for Britain to leave the European Union, with or without a trade agreement.

Both could have significant impact on the stock market.

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