The U.S. stock market’s meltdown continues as the novel coronavirus spreads across the country, but some financial advisors have told people to avoid knee-jerk decisions.
In fact, Matthew C. Kapanek, wealth manager for Kapanek Wealth Partners in Williamsville, said now is a good time to purchase certain stocks at low prices. Only investors who are nearing retirement should take extra precautions, he said.
“It’s the knee-jerk reaction to exit the markets that sometimes causes more harm than the actual economic disruption itself,” Kapanek said.
The Dow losses have reached 10%, which is its worst day since the 1987 market crash. This is creating fear for those with 401Ks and stock portfolios.
Professional sport leagues such as the NBA and NHL are suspending seasons. March Madness won’t go on this year and some conferences, such as the ACC and SEC, have cancelled their championship tournaments.
On Thursday, New York state officials banned gatherings of more than 500 people including.
And although health officials have not reported any positive cases of coronavirus in the Buffalo area, local leaders did cancel Buffalo’s St. Patrick’s Day parade for the first time since the 1940s and postponed another.
“This was a difficult decision for the organizers, but they made that decision keeping the health and safety of this community in mind and wanting to make sure that there was no opportunity for these two great events to spread coronavirus in Buffalo and Western New York,” Buffalo Mayor Byron Brown said Thursday at a press conference.
These cancellations are impacting a volatile stock market and curbing spending, Kapanek said.
“Right now is the time to know what you own,” he said.
“And for a lot of folks, what we’re encouraging them to do is to treat this as an opportunity to be a buyer, buy with conviction. Those dollars that are being taken out of your paycheck and being contributed to your 401k, those haven’t lost anything. You’re actually buying more shares at a lower price than you were able to the week before and the week before that.”
Investors who are within a year or two of retirement will have “some tough decisions to make,” though, Kapanek said.
Soon-to-be retirees likely depend on their retirement savings and if they lack a sound financial plan with some safe, conservative options in their portfolios, they could be facing some trouble.
“You might not have time for your aggressive options to really go up in value,” he said.
U.S. President Donald Trump suspended travel to Europe during a nationally televised address Wednesday and discussed a stimulus package to stem the financial losses in the market.
But Kapanek said the proposal lacks details, so it is difficult to gauge what, if any, impact such a stimulus might have on the stock market and the spending habits of Americans.
One option mentioned by Trump was payroll tax reductions, but Kapanek doubts such a move will spur spending.
“In times when they are fearful, they are not going out and splurging on those big-ticket items, so while the intent of the stimulus package might be good – let’s put more money in the average American’s pocket – that money is going to be saved for a rainy day or saved in case this thing does ultimately get worse because people don’t know. So, to say it is going to provide a quick jolt to our economy is probably unrealistic at this point.”