Given that stocks hit the skids today, what should regular investors do, if anything? Below, three pros offer their take on the market, as well as advice for investors:
Stephen Lieber, CIO of Alpine Mutual funds
Take on the market: What's happened is essentially a reflection of broad insecurities accelerated by various developments and statements. This is a continuing trend, and we don't see an immediate stop to it. The market is apprehensive. There is a dominant fear of unknown valuation and risk. Until we get past that moment, it's going to be difficult. In areas where there is no fear, people will be reasonably secure. Coca-Cola, for example, is close to making a new high.
Takeaway for investors: They have to look at their individual investment holdings to decide what the long-term strength of these companies is likely to be. Obviously, it's an environment of considerable uncertainty as to what appropriate expectations will be. On the other hand, history tells us that with well-positioned investments (in terms of the overall economy), we will get through these periods.
Alan Gayle, senior investment strategist at RidgeWorth Capital Management:
Take on the market: This is clearly a challenging time for the market, which is taking some self-help steps in terms of trying to ensure some stability. How we come out on the other side is going to be an important source of information for the markets going forward. It would bode well if the market will be able to hold given the loss of a nearly 160-year-old firm. In terms of individual stocks, we're looking to companies that are taking their own self-help steps, such as making product changes and cutting costs to improve the bottom line.
Takeaway for investors: Quite frankly, the market moved too fast for really anyone to get out of the way of it. You were either positioned properly, or you were not. This is why setting a course in your investment portfolio and sticking with it is very important. Because when you have events like we've had over the weekend, there's really nothing you can do to fix your portfolio before prices change.
Neil Hennessy, chairman and CIO of Hennessy Funds
Take on the market: I think people are starting to understand that the game's pretty much over. Successful companies are going to acquire unsuccessful companies. It's a great strategic move for Bank of America, which already has such a worldly presence, to acquire one of the best asset managers in the world. In years to come, it will make a formidable company, and strategically it will make a lot of sense. It should also provide confidence to investors that the financial markets are still there.
Takeaway for investors: It becomes very difficult when you get into a sideways market like we're in. People are reacting, then overreacting, to any and all news that comes out and picking it apart. The reality is you have to step back and ask what's happening. For the market we're in now, it's sort of like passing a kidney stone.