Dow’s big dip surprises Junction advisers
Among the many financial advisers throughout Grand Junction fielding client questions, going to meetings and putting out fires on Monday, the first to pick up a phone call from the Daily Sentinel joked, “I have a window that pops out ... if I want to jump off the ledge.”
That was when the Dow Jones industrial average was down some 540 points Monday morning, just hours before it plunged by 800. It later rebounded to close at 369.88.
“What was panicky last week is more panicky today,” said Dave Kearsley, owner of Geneos Wealth Management in Grand Junction.
“In America, we like fast food. We like fast solutions. The fact they put this bill through on Friday doesn’t mean they solved everything instantaneously. It’s going to take months.”
He said it might be five years before the housing market comes back to what it was. It will take a year for consumer confidence to recover, he said. And as far as the markets rebounding, it’s anyone’s guess.
Scott Mercier, vice president for AXA Advisors LLC in Grand Junction, said he wouldn’t be surprised if the Dow experiences a larger drop.
“I certainly didn’t see anything of this magnitude coming on,” Mercier said. “Nobody has a crystal ball and there were clear signs we were in for bad times, but I don’t think anyone expected it to happen this fast. If you look at the wealth destruction in just the last week, it’s in the trillions.”
Mercier urged people to reflect — with a financial adviser, with a spouse or someone else they trust — on their strategies for cash flow, retirement and college funding.
Strike a balance, he advised, between not taking unnecessary risks with a 401(k), especially when nearing retirement, and not being too fearful when dealing with money losses and inflation going up to as much as 6 percent.
“We have inflation creeping up. People can’t get loans. There’s not enough job security and the market is mayhem. You’d be hard-pressed to find people who haven’t been affected by this in one way or another,” Mercier said.
“Hopefully, American ingenuity will come back to the front and we’ll invent our way out of this, but it sure looks dark now, doesn’t it?”
The younger population in the stock market will face an uphill battle as taxes and cost of living go up, but the good news is housing and market investment will become more affordable for them, he said.
“As long as they’re diligent about saving, they’ll be OK,” he said.
Older investors should take care of cash flow needs with conservative investments, but still maintain diversified portfolios, Mercier said.
“There are countless examples of people having too much of their 401(k) in one stock,” he said.
Meanwhile, Chris West, associate principal CPA for Dalby, Wendland & Co. in Grand Junction, said he strongly urges his older clients near 60 not to be so heavily exposed to the stock market, because their stocks won’t have time to weather the current storm.
He urged those with a long time before retirement to maintain their contributions, saying, “In the long run, they’ll be OK.”