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September 25, 2003 at 08:00 PM
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For investors who bailed out of the stock market when it started its two-and-a-half-year decline, now might be the right time to hop back in, according to financial advisors interviewed by National Underwriter.
During the last 12 months, the S&P 500 Index has risen by 12.49%.
Investors “should never have stopped looking at” stock mutual funds and stock sub accounts in variable annuities, says Stephan Cassaday, a certified financial planner with Cassaday & Company Inc., McLean, Va., a fee-based planning firm.
Of $360 million his company manages, roughly 80% is invested in stock and bond mutual funds, Cassaday says.
Clients should be in stock funds and, depending on tax bracket and other considerations, should conceivably hold sizable positions, says Phil Cook, a CFP with Cook & Associates, Torrance, Calif.
“The time to buy is when stocks are cheap,” he says, adding that stock investments through stock funds and stock sub accounts are now “cheap compared to what they were and, more importantly, to what they will be.”
And, compared to what other investment options are returning, Cook adds, stock accounts look good. For example, he says bonds are not providing the returns that match the risk a client is assuming; REITs will not be earning the returns they have been; and bank and CD accounts are offering insufficient returns.
For the client who wants to be invested in the stock market, Cook says he would recommend overweighting in small and mid-cap stocks because these sectors lead the market in an economic recovery.
