Lesko Financial: Stocks Are a Roller Coaster RidePosted: Updated:
Stocks have been on a roller coaster ride and Greg Lesko of Lesko Financial helps put it into perspective.
The stock market’s track since the end of January is enough to give anyone a case of whiplash. It’s been a see-saw and we’re likely in for more. Market volatility isn’t new, but stocks have been on such a meteoric and historic rise for so long that the speed at which they’ve plunged caught many by surprise and the media has been quick to jump on it. But the market hasn’t really even declined enough to call it a correction which is a 20% drop. And this market is overdue for a correction, which is a normal part of the stock market cycle.
There’s nothing about the economy that would cause a sell-off. The jobs picture remains strong and consumer confidence is still high. Some analysts think fears about inflation or the federal reserve further raising interest rates may have spooked investors. Also, people buying “on margin” that is, borrowing money to buy stocks may be a factor. They would have been forced to sell when the market started going down, which likely fueled further sell-offs.
It’s anybody’s guess and no one can really predict what the markets will do. When stock prices go down it can be a good time to buy, "buying the dip” as some stocks become more affordable. But overall, the usual sound investing advice still holds: keep a long-term view, stay well-diversified and well-balanced, don’t make decisions based on the headlines of the day, and above all-- don’t panic.