The stock markets’ swoon on Monday and Friday may be frightening to investors, but local financial advisers suggest sitting tight and even seeking out buying opportunities in what they think looks mostly like a long-anticipated market correction.
“Our thought is: Don’t panic,” said Craig Forbes, co-founder and co-principal of Alpha Omega Wealth Management, an investment advisory firm in Henrico County. “We think some of this had been overdue for a while.”
“My high-level takeaway is that corrections are a healthy part of a strong market, and we haven’t had one in close to four years,” said Jesse T. Ellington III, senior vice president and chief investment officer at Richmond-based Union Bankshares Corp. “This is a way to clear out some of the speculation.”
Michael Joyce, president of JoycePayne Partners, a financial planning firm in Richmond, also advised long-term investors to remain patient.
“In fact, we look for buying opportunities at times like this, while everyone else is selling,” he said. “The markets may continue to go down, but long-term investors shouldn’t be concerned with what’s happening today, this week or this month.”
Investors with diversified portfolios that include stocks, bonds and other investments should sit tight, said James Cox, managing partner of Harris Financial Group in Chesterfield County.
“At this particular moment, most people are of the opinion that this is a market correction and nothing else sinister,” he said. “Market corrections come and go.”
Cox said investors could find opportunities to scoop up stocks at good prices in the technology and finance sectors, and among utilities.
Ellington said investors should be able to find buying opportunities in multiple sectors.
“With this kind of sell-off, it is kind of across-the-board,” he said. “With higher quality, larger companies, prices have come down significantly.”
Advisers said it is difficult to predict how long the declines and volatility will last.
Kent Engelke, managing director of Capitol Securities Management Inc. in Henrico, predicted a rebound in about 30 days.
The volatility also makes it hard to predict exactly the best time to buy.
“If you are young and planning long-term for retirement in a 401(k) and other long-term savings vehicles, you will have opportunities to do that,” Forbes said. Older investors also will have opportunities, as long as their portfolios are still producing the cash they need now.