After a week of unprecedented location drops on major market indexes, it’s no wonder investors may be feeling a undersized nauseous.
“Don’t panic,” said strategist David Kelly, despite the vivid market swings.
Kelly, chief global strategist at J.P. Morgan Asset Direction, said it’s reasonable to expect the stock market to have a correction after hold out year’s record run. The Dow, S&P 500 and Nasdaq all had their best years in four years in 2017.
“It is a no doubt correction. It’s not a panic sell-off,” Kelly told CNBC.
“It’s a reminder to people there’s no such thingumabob as a free lunch in the stock market,” he added.
Behind the turmoil is the design of rising interest rates and there’s “nothing wrong” with that, Kelly also phrased.
“It’s appropriate as the economy grows but what’s happened is it’s caused a spike in volatility.”
Agreeing to Kelly this is a “good time to pause,” rebalance portfolios and reassess hazard.
If you started out with a 50/50 stock allocation a few years ago, you could be comfortably above that now. And “if you haven’t rebalanced after 2017’s run up, you’re overweight shares,” Kelly said.
But instead of yanking assets out of the market altogether, visit invested in stocks for the long term and diversify the mix of stocks and stock repositories in your retirement, college savings plans and other accounts.
Economic advisors with clients who are very near retirement or who have short-term goals are favouring that they keep a chunk of their savings in cash, certificates of put away and high-quality short-term bond funds.
“On the Money” airs on CNBC Saturdays at 5:30 a.m. ET. Enquire into listings for air times in local markets.
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