For the first time in a week stocks are trading higher, poised to the end the day with gains instead of losses, but that won’t undo all the carnage of the week. The broader stock indexes are still heading toward a weekly loss of between 1% and 2%, oil prices remain under $30 a barrel and the KBW Bank Index (BKX) is trading near a three year-low.
Former PIMCO CEO Mohamed El-Erian wrote Friday in his Bloomberg View blog, “The growing list of improbable developments” – which also includes negative interest rates in many European countries – “is indicative of a global system that is signaling a major transition away from an order in which central banks effectively repress financial volatility and toward one of higher and quite unpredictable volatility, in both directions.”
ThinkAdvisor asked a number of financial advisors this week how they were weathering the storm and what changes, if any, they were making or considering to make in clients’ portfolios. They generally recommended doing nothing or using the opportunity to buy more stocks.
“Hang in there. It’s too late to move now,” said Karl Frank, president of A&I Financial Services in Englewood, Colorado. “Your patience will be rewarded over time. These downturns are the exact reason stocks deliver better returns over time.”
Jonathan Swanburg, an advisor with Tri-Star Advisors in Houston, Texas, recommended that investors rebalance their portfolios, selling assets that have appreciated in value like bonds and use the cash to add to positions in assets that have lost value like stocks, then “stay the intended course. Getting emotional in volatile markets tends to lead to bad decisions and poor returns.”
Kristin Sullivan, too, recommended changes only if they were for rebalancing purposes, and she suggested “watch as little financial TV as possible.”
Robert Wander of Wander Financial in New York City suggested investing any cash waiting on the sidelines into stocks even though 2016 follows a down year for stocks, which has historically signaled gains the next year. “I don’t put much faith in that either,” said Wander.