WILLIAMSVILLE, N.Y. (WKBW) — Investment experts are predicting that the Stock Market will see its worst December since the Great Depression in 1931.
It is a dramatic correction for the market that set new records earlier in 2018 and had a banner-year in 2017.
A trade war with China, tariffs, increasing interest rates by the Federal Reserve and the ongoing Special Counsel investigation by Robert Mueller are some of reasons why the market is seeing volatility, said certified financial planner Anthony Ogorek from Williamsvile.
"Markets diving are a distraction. Political mayhem is a distraction. The more people are distracted, the less they are going to be buying and the less secure they feel. That gets to be a self-reinforcing cycle which can depress earnings and stock prices," added Ogorek.
Glenn Wiggle and Mike Lomas, partners from the Financial Guys in Williamsville, said people should realize that this is actually a good time to buy stock because prices are down.
"What a great opportunity to increase you contributions (for those with 401(k) and IRA accounts) because you are buying things on sale," explained Glenn Wiggle.
All three of the investment pros talked with 7 Eyewitness News Reporter Ed Reilly and said people with diversified retirement accounts, that have a good mix of stock and bonds, will recover over time.
However, investors should avoid the impulse to dump stocks and rush to bonds.
Making drastic money moves can actually reduce your earnings by over 50%, added Anthony Ogorek, who referred to data from a 20-year period.
"Why is the average investor only making 2.6% return instead of six (6) to seven (7) percent? The reason is when we get these down-drafts in the market, they sell," said Ogorek.
The experts said everyone should now take the opportunity to re-balance their retirement accounts to see if "small adjustments" are needed. Some 401(k) accounts have options where that can happen automatically.
It is unknown how long the Stock Market downturn will last, but Anthony Ogorek said it can take up to 18 months for things to settle after the Federal Reserve raises interest rates.
One other word of caution, this is the worst time for people to withdraw money from retirement accounts because the down market can reduce earnings in the future.
Unfortunately, people close to retirement age, and those now currently withdrawing money from their accounts, have no choice and are hoping the stock market will rebound in the near future.
Ed Reilly has more from the experts in the attached video report.