Buzz
Gary Cohn has stepped down from his position as President Donald Trump’s chief economic advisor following the introduction of proposed tariffs on steel and aluminum, which resulted in a 300-point drop in the Dow on Wednesday.
Why are investors nervous? Because Cohn’s departure “indicates that the Trump administration is committed to pushing ahead with tariffs, increasing the risk of a trade war,” explained Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, in an interview with CNN Money.
So, should you make any moves at this moment? No one can predict the market, and its direction is uncertain. But remember, the market is about more than just Gary Cohn. So, here's my advice that I always give during market fluctuations:
Focus on the Long-Term
“Invest regularly, whether monthly or weekly,” suggests Lou Haverty, a certified financial analyst. “By making consistent, smaller investments, you'll take advantage of market conditions at all times. In the long run, you'll benefit from investing during market corrections.”
Recognize that this is a typical occurrence, even though it may feel unusual after nearly a decade of stability. “People tend to forget what a downturn feels like,” stated Scott Hanson, co-founder and senior partner at Hanson McClain Advisors, in an interview with CNBC. “It’s wise to be prepared for such times.”
Buy
“At this moment, the market may be down, but no single factor will alter the broader economic outlook,” said Doug Cote, chief market strategist at Voya Investment Management, speaking to Marketwatch. “I believe the market is overreacting, and this is a good opportunity to buy the dip.”
“Set up a monthly recurring investment plan for an ETF or a diversified portfolio to ensure you're buying during declines and profiting when the market recovers,” advised Evan Tarver, a financial analyst at Fit Small Business.
Review Your 401(k) Regularly
If you're around five to ten years from retirement, it’s wise to start taking a more cautious approach, advises Michael Dinich, a retirement planner at Your Money Matters.
“At this stage, preserving your money is more crucial than chasing the highest returns,” says Dinich. “If your retirement or investment plan relies on risky high-stakes strategies, it's likely to fail.” He suggests those approaching retirement consider indexed and variable annuities, though it’s important to examine fees, which can be significant, and assess whether the potential returns justify the cost.
Focus on aspects within your control, such as building up your cash reserves or acquiring new skills for in-demand careers that could be valuable if a bear market hits.
