Wall Street sell-off a ‘gut check’ for LI investors, observers say
A sharp sell-off on Wall Street is shaking investors around the world, but Long Island observers Friday urged a measured reaction to the worst-ever start to a year by the benchmark Dow Jones industrial average.
Mitchell Goldberg, president of ClientFirst Strategy Inc., a Melville-based investment firm with more than 100 clients, said people shouldn’t panic.
“If a client’s portfolio is diversified, most likely the portfolio is not going down as much as the overall market,” he said. “People should know what they have and understand why they own these securities . . . so that they are not tempted to make snap decisions.”
Robert Goldberg, a finance professor at Adelphi University and no relation to the ClientFirst executive, said global and domestic forces are combining to pressure stocks and forcing a gut check for investors.
“The best thing investors can do is to do nothing, assuming they have a well-thought-out investment strategy that is focused on short-term, intermediate-term and long-term goals,” he said.
Long Islanders should be better able to cope with stock market turmoil because of their knowledge of nearby Wall Street, said John A. Rizzo, chief economist for the Long Island Association business group and a Stony Brook University professor.
“They are better positioned to see through the financial markets to the real economy, and not to panic,” Rizzo said after Friday’s market close. “On the other hand, precisely because they are wealthier, they have more money in the financial markets and therefore have more at stake” than the typical U.S. investor.
Adelphi’s Goldberg said the downturn is an opportunity for stockholders to check their “investment blood pressure.”
While it’s easy to invest when the market is climbing, “you need to be prepared for market drops of 10 percent to 20 percent” or more, he said. If investors are losing sleep or “fixating on the market,” Goldberg suggested shifting more assets to cash and bonds.
As investors fretted about a possible economic slowdown, the Federal Reserve Bank of New York released a survey of roughly 100 state manufacturers indicating a sharp downturn. Indicators, including orders and shipments, declined at the fastest pace since the Great Recession of 2007-09, according to the January 2016 Empire State Manufacturing Survey.
Still, Rizzo said U.S. economic fundamentals overall remain strong and lower oil prices will put money in consumers’ pockets.