LEXINGTON, Ky. (LEX 18) — Stock markets were trending back up Tuesday after falling more than 1,000 points Monday; it was one of the largest drops since the economic shutdowns of the coronavirus pandemic.
Social media went into a frenzy after several big companies dropped significant percentages. According to the Associated Press, the Dow Jones fell 2.6%, the S&P 500 dropped 3% for the first time in nearly two years, and the NASDAQ Composite followed suit, sliding down to 3.4%.
"The market is completely being driven by the Fed and it's being amplified by the tensions over seas, particularly in the Middle East," explains Marc Cobane, who is one of three co-founders for Alpha Financial Partners. "Market corrections and market crashes aren't a matter of 'if' it's a matter of how long."
"Corrections and pull-backs in the market are not only typical but healthy, the market can't just go straight up," Greg Turcotte, who is another founder of the wealth management company.
Cobane says when the market goes down, there are more sellers than buyers. He says the market has been climbing the wall of worry for decades. Now, with this pullback, things look a little more reasonable. This is a more attractive entry point for putting money to work."
However, the looming fear of a potential market crash has risen across the American people. Both Cobane and Turcotte say no one should worry about the market crashing because it's the market correcting itself. As of Tuesday, the market is already back on its feet and rising.
"Believe it or not we've actually had a couple corrections over the last four or five years. People have probably forgot about it with the global pandemic. You know the stock market dropped almost 30% in a couple week period," explains Turcotte.
"The great pandemic took about nine months for the market to fully recover. Those types of events are going to happen, and generally, those people who have weathered and waited through them didn't panic and sell. They got their money back and much, much more," Cobane said.
Right now, it's important to focus on what you're trying to accomplish in your investing and not let fear drive your investments: "What am I spending my money on? You know, is it stuff that's a variable we can pull back on a little bit."
If you're worried about your 401k, “401k is for retirement someday. Well, if you’re in your 30s like myself, that’s not coming anytime soon. I have time to weather that storm. For our clients who are in their 60s closer to retirement, you know that’s when you probably want to reach out to a financial adviser," explains Turcotte.
“If you have cash to put to work, it’s a good time to start nibbling. It’s a good time to start into the market over the next few months as we get into the election and through the inauguration," said Cobane.
"Just a reminder, focus on your goals, long term adjectives, it's healthy when the market corrects and comes down," Turcotte breaks down. "In theory if the stock market comes down, 10 or 15%. If you liked that stock a month ago and now it's 15% less, now it's on sale."
