AN Orange financial planner said Tuesday’s stock market fall was “not a crash” and presented an opportunity for everyday investors to get into the market.
The Australian stock exchange dropped more than three per cent on Tuesday following a plunge in the US stocks over the weekend.
The US market suffered its biggest fall in two years, with the Dow Jones – a stock market index of thirty major companies – plummeted almost 666 points.
Despite the widespread panic as news of the drop broke on Tuesday morning, certified financial planner Peter Roan said it is often the nature of the Australian market to mimic trends in the US and this dip provided prospects for investors, not reason to panic.
“It’s not a crash,” said Mr Roan.
“The US stock market has boomed under Trump and the Australian economy is doing quite well.”
Mr Roan said the drop in stocks presented an opportunity for people who may have previously been locked out of the market.
“Now is the time to accumulate,” said Mr Roan.
“The way to make money is to buy something that is cheaper than what it is worth. With prices low that time is now for those wishing to invest.”
Mr Roan said that it is often human instinct to begin thinking about cashing out when people hear that the market is in trouble, but this course of action could result in a lower return for the individual, as well as having a detrimental effect on the market.
Mr Roan suggested that Warren Buffett – often cited as the world’s most successful investor – offered the best advice to those feeling uneasy at watching their investments losing value.
“Mr Buffet said, ‘Market volatility only serves to move wealth from the impatient to the patient,’ Mr Roan explained.
“In this instance, if people are impatient and sell up they may lose money. By staying the course or picking up shares at cheaper prices they can ride out this hiccup.”
Mr Roan said there were a few questions everyone should be asking their financial advisors.
“I’d suggest for people to ask their advisors, ‘is my portfolio positioned to take advantage of any upsides that may now occur? Have I got the funds to take advantage of this current dip in the markets?’” said Mr Roan.
Mr Roan said with no two stock portfolios the same investors would need to closely examine their options.
“The hardest thing to do is actually the logical thing, which is to hold on to your stocks and seek advice,” he said.
“For some people no action will be required. For others, now is the time to review their super and enhance their opportunities.”