Stock Slide Wipes Out $1.4 Trillion, Big Money Investors in ‘No Man’s Land’With the Dow Jones Industrial Average in freefall Friday, ending the session 530.94 points lower, JJ Kinahan, chief strategist, at TD Ameritrade (AMTD) described the carnage to FOXBusiness.com like this, “big money investors are in no man’s land.” Those investors, large institutions, are moving away from risk and putting more assets into cash or protection because there are just too many unknowns. The biggest risk being China, which is one big cloud of uncertainty, and the newest risk being a confused FOMC. The July FOMC minutes showed policymakers were divided over job growth and low inflation which raised questions about the timing of a rate hike. Adding to growth fears, 2Q earnings are on pace to be flat at best.
Best advice during the stock storm: Ride it outIt’s difficult for investors to sit on their hands and do nothing as their stock portfolios are being chain-sawed, but that’s precisely what they should do.
The time to sell is not in the midst of a dramatic sell-off like we had Friday and Monday. Prudent stock investors should stay the course and allow this downturn to run its course.
For starters, market corrections of 5 percent or even 10 percent — where this one now stands — are a normal, healthy part of a bull market. But the last 10 percent correction in the Standard & Poor’s 500 index occurred almost four years ago.
