Neil Waxman is Asked by CNBC for His Thoughts on Market Volatility.
How to take action on New Year's market volatility.
Thursday, January 7, 2016
Kelli B. Grant | @kelligrant
Thursday, 7 Jan 2016 CNBC.com
Amid another market rout, it's time for investors to look for buying opportunities.
Markets plunged yet again Thursday morning after a sharp sell-off in Chinese stocks prompted China to halt trading early for the second time this week. It's the latest wave in a rough first week of 2016, which had the worst opening day in eight years.
Advisors' broad advice to investors remains the same: Hold on.
"China devaluing its currency isn't an excuse to liquidate your stock portfolio," said certified financial planner Neil Waxman, a managing director with Capital Advisors in Shaker Heights, Ohio. "If you have a plan, stick with the plan."
Investors trying to time a return to the market usually miss out on big early gains, a costly mistake. But sticking to an existing investment strategy doesn't mean you should do nothing.
A decline in the market offers the chance to bargain-hunt, said certified financial planner Charles Bennett Sachs, managing partner of Private Wealth Counsel in Miami. "You're buying volatility in the markets by definition," he said. "Embrace it. If you don't want volatility, that's called a CD, and we all know where that goes."
(In a CNBC poll Thursday afternoon, 52 percent of site visitors said they were staying the course, while 27 percent said they were buying and 21 percent selling.)
Simply continuing contributions into retirement and college savings accounts accomplishes that through dollar-cost averaging. Assess your portfolio to see if you might benefit from rebalancing, or buying more of securities you think are undervalued.
"If you have surplus cash, look at what's down," said CFP Reed Fraasa of Highland Financial Advisors in Riverdale, New Jersey. "Whatever's the most undervalued, that's what you put the money in."
Even investors who don't like the look of the market or have a shorter time horizon for a goal may still find it's the right time to use that spare cash to buy something else. In recent years, clients have been more interested in exploring investments like catastrophic bonds and triple net leases, Sachs said. "Things that day in and day out are still paying dollars, irrespective of the market," he said.
The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss.
A Certificate of Deposit (CD) is a savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.
A plan of regular investing does not assure a profit or protect against loss in a declining market. You should consider your financial ability to continue your purchases over an extended period of time.
Portfolios are rebalanced by buying and selling securities that have changed values in order to restore their original proportions in a portfolio. Rebalancing may result in a taxable event.
A catastrophe bond (CAT) is a high-yield debt instrument that is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake. It has a special condition that states that if the issuer (insurance or reinsurance company) suffers a loss from a particular pre-defined catastrophe, then the issuer's obligation to pay interest and/or repay the principal is either deferred or completely forgiven.
A triple net lease is a lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.
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The views and opinions expressed herein are those of the author and may or may not represent the views of Capital Analysts or Lincoln Investment. Articles are not written or produced by the named representative and the information has not been verified. There is no guarantee as to the completeness or accuracy of the content. Quotes and remarks have been excerpted from conversations with the interviewer and may have been taken out of context. All remarks are hypothetical in nature and are intended to be informational only. They should not be regarded as investment advice, performance claims or testimonials. This is not a solicitation, recommendation or endorsement of any investment, investment strategy, tax strategy or legal advice. There is no guarantee that any strategies discussed will result in a positive outcome or the achievement of financial or retirement goals. A plan of regular investing does not assure a profit or protect against loss in a declining market. You should discuss any legal, tax or financial matters with the appropriate professional. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal.
S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. Investors cannot invest directly in an index. Past performance is no guarantee of future results. Neither asset allocation nor diversification guarantee a profit or protect against a loss.
You should be aware of and carefully consider the following points before determining whether alternative investments are appropriate for you. Alternative investments include, but are not limited to, investments in hedge funds, fund of hedge funds, CTAs, private equity funds, real estate funds and managed account platforms. Alternative investments are very speculative and are highly risky. Alternative investments are not regulated. They may employ speculative and risky investment strategies. They may have limited liquidity and carry high management fees. They may have little or no operating or performance history. Past performance is no guarantee of future results. There are no guarantees of profit.
A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.
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