Don’t Let Short-term Market Volatility Derail Long-term Investment Perspective
The first few weeks of 2016 brought a big drop in stock prices, but local investors should not allow short-term stock market fluctuations to derail their long-term investment decisions, says Karen Collier, a Financial Advisor with Edward Jones Investments in Bridge City.
Current concerns in the market remain falling oil prices and slower economic growth in the rest of the world. Oil prices have dropped sharply, China’s Shanghai stock exchange declined, putting it into bear market territory. Although stocks in China don’t directly reflect prospects for its economy, the slowdown in China’s growth remains the underlying worry. However, as stocks have dropped, bond prices have gained, helping buffer investor portfolios.
“We don’t think this is the end of the bull market,” said Collier “Over time, stocks are supported by economic and earnings growth. We expect the economy to continue to grow modestly, and we think corporate profits will rebound as oil prices and the dollar stabilize over 2016. Don’t let the shaky start to the year undermine your confidence in the longer-term outlook.”
Edward Jones financial advisors believe this has the potential to present good opportunities for long-term investors to purchase quality investments at lower prices.
“Higher market volatility seems likely to continue, so be sure you’re prepared and stay invested,” Collier said. “The most important decision is your mix of stocks and bonds, based on your risk tolerance and long-term financial goals. You may need to rebalance by adding fixed income – or stocks – to return to an appropriate mix.”
Edward Jones financial advisors also say investors should consider improving the diversification of one’s equity and fixed-income investments.
“As you review your portfolio, look for opportunities to upgrade the quality of your investments,” said Collier. “These actions can help ensure you own a carefully constructed portfolio of quality investments that is well-positioned for volatile markets.”
The sidelines are no place to be when it comes to one’s long-term money, she said.
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