The stock market isn't as weak as some investors may think based on Thursday's steep selloff, Peter Mallouk suggested.
"Many clients are calling asking if this is the opportunity to lean in. I think many have overestimated the market drop," Mallouk, Creative Planning's president and CEO, told ThinkAdvisor in an email as stocks tanked globally.
The tumble was fueled by the large tariffs on U.S. imports that President Donald Trump announced Wednesday.
"International stocks, emerging market stocks, bonds and the S&P 493 (take out the Mag 7) were all positive YTD coming into today," Mallouk said. "The market is soft, but we are far from blood in the streets."
The RIA leader indicated that his clients are prepared for market downturns.
"Corrections happen about every 10 to 18 months, and the average correction is nearly 14%. Our clients know this and know they happen for different reasons," Mallouk said.
"The tariffs were telegraphed even pre-election," he said. "The only surprise — if we can call it that — is how deep and widespread the tariffs are. And Trump is selling that he is more committed to this than many guessed. I think the market believes this is going to take less than a year to resolve. If it really believed these were permanent, it would be down over 20% today. If we get a significant pull back from here, it would be an incredible buying opportunity."
Mallouk generally doesn't suggest that clients add Series I savings bonds or U.S. Treasurys as tariff-proofing tools for their portfolios now.
"Only if you believe this will go on for forever," he said. "For those that believe this will lead to negotiations that happen in the next few quarters, this would be a mistake."
The S&P 500 was down about 4.8% at the market close, while the Nasdaq was off nearly 6% and the Dow Jones Industrial Average was down almost 4%.
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