It feels like Déjà vu all over again! If you are an investor looking for a reason to be worried, there are plenty of headlines to light your fuse. Go ahead; press the panic button at your peril. I do not blame you for wanting to hit the switch. It is in our DNA to act accordingly, especially when the chicken littles are out in force and the bears, on cue, are yelling, “I told you so!” Of course, the media is hyperventilating because they know that catching eyeballs and selling newspapers is all about fear. Furthermore, the worrywarts, the naysayers, and the pouting pundits of pessimism are out in droves revealing their same-o-lame-o gloom and doom story. As expected, the pundits and journalists will work overtime during the next few days, weeks, or perhaps months trying to scare us out of our long-term investment plan.
I understand the temptation to believe the Armageddon scenario, but this is not the time to give in; it is the time to dig in! I encourage you not to listen to the chatter. Pay no attention to the voices of doom and gloom Just fuhgeddaboudit! Let me put things in perspective. As of today, the S&P 500 has gone 1,413 calendar days (i.e., from 10/03/11 through and including Sunday 8/16/15) without a 10% or greater drop in the index, the 3rd longest stretch without a double-digit pullback in the last 50 years (source: BTN Research). Unless I am missing something, what is the big deal? Should we not expect a decline of some magnitude? Bring it on! I am ready, and you should be as well. Let us not duck the inevitable. Instead, let us meet adversity head on and be done with it for a while.
Please do not become a swollen head pessimist and utter those four famous words, “This time is different”. Perhaps it is different, but so what? Frankly, the bottomless reservoir of negativity and these four troublesome words are circling the drain. They have driven well past the last exit to relevance. Of course, stock market declines are worrisome. Gut wrenching panic is painful. Fear is upsetting. Nevertheless, the folks who can control their fear are arguably the ones who do not become another Wall Street casualty. Until we conceive a treatment for the human predisposition to flee the stock market in a panic, the Wall Street graveyard will continue to overflow with cadavers of those who allowed their emotions to get the best of them. On the other hand, if you are one of the few who can hang tight when the going gets tough, I tip my hat to you, as I know it was and is not easy.
Nevertheless, if you want a broader, more rational picture of our current economic situation, I encourage you check out he August 20, 2015, short read from Fortune Magazine http://fortune.com/2015/08/20/american-economy-worries/. The author addresses all the “terrible news” that continues to bombard us. For example:
•It has not been this cheap to fill our gas tank in over a decade.
•Companies that rely on energy to manufacture their goods must figure out what to do with the excess capital they are not spending on fuel.
•American corporations are struggling under the burden of enormous piles of cash. They may have no choice but to return some of that money back to shareholders in the form of dividends.
•It appears that unemployment is so low that wages for American workers are going up, and that could raise consumption and demand for products and services.
•Contributions to 401(k) and other retirement plans are up dramatically.
•Housing starts and the construction sector are booming.
•America’s biggest global economic competitor (China) is reeling.
•The Federal Reserve might decide that it no longer has to keep short-term interest rates low because the emergency is over, and the economy has recovered.
The author apologizes (tongue in cheek) for bringing us all this terrible news! Kidding aside, please know that I am the first person to agree that there are always reasons not to invest in stocks, and the stock market will most likely continue to have its gut-wrenching declines from time-to-time. Nevertheless, my primary purpose of sharing this information is to help us appreciate the fact that things are seldom as bad as they appear and why it is. In my opinion, it is riskier to be out of the market than in it. That is my story, and I am sticking to it!
Harry Pappas Jr., CFP®
Managing Director-Investments
Certified Estate and Trust Specialist
Pappas Wealth Management Group of Wells Fargo Advisors
1000 Sawgrass Village Suite 103
Ponte Vedra, Florida 32082
904-273-7955
harry.pappas@wellsfargoadvisors.com
The use of the CDFA™ designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firm or its associates are acting as experts in this field.
The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice.
Wells Fargo Advisors LLC, Member SIPC, is a Registered Broker-Dealer and a separate non-bank affiliate of Wells Fargo & Company. Wells Fargo Advisors did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request. Wells Fargo Advisors, LLC, Member SIPC.
