Better Ask Barry: Advice during the coronavirus stock correction

SALINAS, Calif (KION) Stocks rallied Monday, following last week’s massive selloff triggered by worldwide concerns over the coronavirus.

Analysts say we can expect more volatility until the virus is contained. So what are nervous investors to do?

The short answer: Calm those nerves and consider adjusting your investment mix, but if you don’t need the money right now, patience might be your best approach.

When trading began Monday, Wall Street was coming off its worst week since 2008.

On Friday the Dow dropped 357 points, the NASDAQ ticked up a fraction, and the S&P lost 24.

Uncertainty over the coronavirus and its effects on the global economy led the selloff, which wiped out over 5 trillion dollars in market values worldwide.

What should investors do?

“If you’re not diversified,” said financial advisor Pete Andresen, “now is a good wake up call.”

Andresen says periodic market corrections are not unusual.

“Basically, the economy and financial markets go in cycles between under-valuation and over-valuation. Right now, we’re overvalued and there’s too much debt in the system, so a sharp correction like that is kind of normal,” he said.

A smart approach is to diversify your investment mix.

“If you are diversified already, and that means you hold some bonds, you hold some cash, you hold some stock in your 401K or investment portfolio, then largely it’s a question of riding it out and being rational. Just waiting it out,” said Andresen.

Days like today will help, but market volatility will likely continue.

“It depends on the coronavirus,” said Andresen. “My bottom line is that something has to happen because of our excessive debt and our overvaluation. It’s not going to be the end of the world. It’s not going to be permanent, but it’s going to happen.”

Another analyst said there have been 30 stock market corrections of at least 10 percent since 1982 and only 23 percent of those led to a bear market. It may be uncomfortable in the short term, but things tend to rebound in time.