LEXINGTON, Ky. (WKYT) – The Dow Jones Industrial Average fell more than 700 points Monday as crude oil prices surged following U.S.-Israel military actions against Iran. A Lexington financial planner says investors should resist reacting to short-term swings.
Focus on the long game
Raymond Backers, owner of Q2 Wealth Management in Hamburg, said market uncertainty is not a reason to make sudden moves with a portfolio.
“The long game is really important — long-term investing says do not pay attention to short-term volatility of the changing price because that will make you complete the wrong decision at the wrong time,” Backers said.
Backers pointed to a 12-month graph showing investors are up 12 percent over the past year as context for the current dip.
“It looks more palatable when you zoom out — it looks more troubling when you zoom in,” Backers said.
A time to rebalance
Backers said the current market conditions present an opportunity for investors to rebalance their portfolios.
“This is a great time to rebalance — rebalance means to sell things that are really profitable and buying things that are not doing so great right now. This is a great time to do that in your portfolio,” Backers said.
He said investors with money on the sidelines should have a plan ready if the market drops further.
“If we go down by 10 percent and you got any money on the sidelines, put it in. If we go down by 10 percent, rebalance the portfolio. This is the time not to have anxiety — this is the time to have predetermined things you want to do when things happen,” Backers said.
What to watch
Backers said the underlying economic indicators remain sound despite the day’s losses.
“So all three things you need to pay attention to are quite good, but no one wants to see the Dow down 500 points,” Backers said, referring to the economy, interest rates and earnings as the key long-term factors.
Backers said investors should avoid reacting to outside noise and focus on their predetermined investment plans.
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