Market Volatility: Questions Answered

January 22nd, 2008 : Fond du Lac Reporter interview with Jeremy R. Feucht

What does the recent market activity mean for Fond du Lac investors?

 Stock market corrections tend to bring out all of our worst fears and can cause some investors change their investment behavior by selling out when the market is low.  Investors that sell are the left with the decision on when to get back in.  It messes up the old adage of: “buy low, sell high.”  Consider sticking with your long term plan, and adjusting your risk tolerance only if you’re losing sleep at night.  If you change your investment allocation to less risk, it is usually a sign that you should be in that lower risk category going forward, even when markets return to positive territory.  Long-term investors may want to consider adding to their stock positions as the market falls, taking advantage of the fear in the economy for potential gain in the future. 

What caused the recent downturn in the market? How long before the market recovers?

The recent downturn has mostly been caused by the expectation that corporate earnings will fall in the near term, new home starts have fallen to their lowest in 16 years, and financial firms are writing off billions in sub-prime debt.  Although we never know when the market will recover, history as indicated by the S&P 500 has shown that about two of every ten years the market gives some back before it moves forward again.

What should investors be doing to protect their investments?

Investors need to construct portfolios that they are comfortable in all types of market cycles.  There are many options to help lower risk, but keep in mind they are commonly associated with lower long-term returns.  If investors need help constructing their investment portfolio, I recommend they visit with a local professional to help them with this process.

Are the recent fluctuations on Wall Street normal?

Yes, we have seen seven to eight 5-6% drops since 2005, this is the first 15+% drop that we’ve seen since 2002 (Yahoo Finance 1/21/08, S&P 500).  So as of late, I would say this volatility is pretty normal. 

Is it simply time for investors to make minor adjustments? Or is it time to panic?

I think that it is a good time for investors to review their comfort level and make changes only if their future goals and expectations are not in line with the volatility and risk they are personally experiencing.

What kind of impact will Wall Street fluctuations have on average Fond du Lac resident?

The world is getting smaller, Wall Street is Main Street these days, the average local resident has one or more 401k’s, IRA’s, or Roth IRA’s, most residents are exposed to this volatility. 

What is the best way for an investor to get in touch with Feucht Financial Group?

Jeremy Feucht, owner of Feucht Financial Group, LLC, National Planning Corporation, member FINRA/SIPC, can be reached at 920-921-6288.  His firm manages over 175 Million dollars in client assets.  More information on market volatility can be found at his website www.feuchtfinancial.com.