“Claman Countdown” panelists Jack Janasivic and Keith Fitz Gerard discuss how to deal with market volatility in their tariff policy.
Financial markets have experienced historic volatility amid rising uncertainty from President Donald Trump's trade war with China and other countries, with experts saying investors should stick to long-term plans and resist the urge to make snap decisions.
The Dow Jones Industrial Average experienced more than 2,000 consecutive swings in consecutive trading sessions on Monday and Tuesday, with the Monday session setting the record for the largest info-point swing.
As investors see 401(k), IRA, or other securities accounts fluctuate wildly, experts suggest that they shouldn't panic and sell stocks or deviate from their long-term investment plans.
“If investors have a good plan, they should stick to the plan,” David Bernsen, founder and managing partner of the Bernsen Group, told Fox Business in an interview. “For example, if you have a stock market in your 401(k) or retirement account, the weight in the stock market is supposed to take into account the fact that the market sometimes decreases.”
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Experts say investors should stick to long-term plans rather than deviate in response to market volatility. (Michael M. Santiago / Getty Images / Getty Images)
“They don't make this quick, this is intense, but they do it,” he added. “It happened after Covid, it happened after the financial crisis and after 9/11. We have one of these experiences every five to seven years. They are really brutal, but it's part of why investors get a better return over time from being in the stock market.”
Bahnsen explained that there is a risk of reducing long-term profits by responding to market disruptions and making decisions based on volatility-induced panic.
“What investors do to undermine their returns is something that panics in these times. What investors think they need to do is not really remember whether this trade war takes place in two hours, two weeks, or two months. “This market violence may already be nearing the end. That might go further, but it's over.”
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The market has experienced historic volatility during President Donald Trump's trade war. (Spencer Platt/Getty Images/Getty Images)
Bahnsen added that investors who contribute to the 401(k) account, or who are reinvesting dividends during a volatile slump, are improving their portfolios over the long term by purchasing stocks at relatively low prices.
“This is one of the big reasons why I built a $7.5 billion business as a dividend growth investor. Because reinvestment during volatile downtime helps the portfolio. “So if people are added to 401(k) every two weeks, if people are reinvesting dividends, the portfolio is getting better as things go down. It won't get worse.
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President Donald Trump's trade war has recently prompted a slump in a volatile market. (Getty Images/Fox News)
Christopher McMahon, president and CEO of Aquinas Wealth Advisors, stressed in an interview with Fox Business that investors should go on a regular basis in the process of assessing risk tolerance, age and retirement plan investments.
“We develop an asset allocation model, stick to it, then stick to it, up to 18 months. We need to reassess the risk profile every 12 months at most, in our 50s or late 60s, closer to retirement,” he said.
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McMahon also stated that the market's historic recovery period from a major recession is relatively quick in the context of long-term retirement plans, making it even more important for investors to remember that there will be a bounceback in the end.
“The average recovery time from the 10% slump was three months. The average recovery time from the 20% adjustment is eight months. It may not happen this time now, but it certainly will recover,” he added.
