Things that happen in Washington and the West Coast affect things in Clarksdale and what happens on Wall Street has an effect on Main Street, too.
Wall Street saw two days of volatile trading based on a number of market factors – the coronavirus concern being one of them.
And while no one can predict what will happen next in the economy, Andrew Yee, a financial planner with Barnes Pettey of Clarksdale, has offered his advice on how to handle a changing market and what his firm is telling clients.
Obviously it’s a little different with each client since their needs, goals, and risk tolerances are different,” said Yee. “We listen to their concerns and go over their portfolio allocation with them. We give them the facts and not opinions about the situation.
“We have diversified portfolios for clients to weather the downturns in the markets,” Yee added. “If there are no significant financial changes upcoming for them personally in the next year or two, then we generally tell them to be patient and we will get through this.”
Yee said money can be made in a changing market and some investors look to capitalize on that change.
“Most clients are wanting to add money during these times because of the value out there,” said Yee. “There have been numerous epidemics since the 1980s from Aids, SARS, Avian Flu, MERS and Ebola to name a few and the markets have recovered from them and gone on to new highs.”
So what are the factors affecting Wall Street this week?
“Uncertainty is the main factor that is affecting this market,” Yee explained. “Right now there are more questions than answers and if there is one thing that the markets do not like, that is uncertainty. The virus is one major uncertainty and the national election is another.”
And these national factors are touching Clarkdale’s economy.
“Everyone has been affected by this and not just those that have investments,” said Yee. “Service industries like retail and restaurants, to tourism to name a few.”
Yee said changes or adjustments in the market are natural and occur regularly.
“Markets ebb and flow, that’s just what they do,” Yee pointed out. “The reason can be different from a sub-prime mortgage crisis to a war and now a virus.
“There will always be something to cause a disruption in the markets,” he said. “Investors need to understand this and construct an investment allocation with their advisor and stick to it.”
Yee urged caution and patience.
“This is where having a competent advisor pays off. People need to make sound investment decisions and not invest on emotion. That is easier said than done.”
The S&P 500 rose 6 percent on Tuesday, recouping half of Monday’s historic sell-off. The Dow rose 5.2 percent on Tuesday and the Nasdaq clawed back at 6.23 percent.
Also on Tuesday, the Trump administration pushed an $850 billion stimulus package to prop up the economy and discussed sending Americans $1,000 checks within two weeks.
The pandemic has caused severe business and travel disruptions across the world and Clarksdale as people stay home and avoid their usual activities. Many companies have warned of lower revenue, and most are conservatively bracing for a U.S. economic downturn.