The Good News When Stock Prices Plummet
BOSTON (CBS) - Art Hogan, the chief market strategist at Wunderlich Securities in Boston, spoke to WBZ NewsRadio 1030's Deb Lawler Monday as the Dow Jones Industrial Average dropped more than 1,000 points at one point.
WBZ: What's causing this to happen?
Hogan: "This is one of these violent sell offs that's a combination of us being concerned about the general global economy, especially as it pertains to China, and really not having seen much of a sell off all of this year."
WBZ: Would this keep the Federal Reserve from raising interest rates any time soon?
Hogan: "I think the Fed would love to raise interest rates sometime this year, September is their next meeting, but if things continue to look like they are, if the markets are as precarious as they are, both domestically and globally, I doubt very much that the Fed's going to pull the trigger."
WBZ: Is it a good time to buy?
Hogan: "It's certainly a good time to sharpen your pencil and make a list of all those things that you missed in this great bull market that's been going on since March of 2009. So, look at things like Google and Apple and Facebook and all the things you said, 'boy I wish I could see this market pull back a little bit' and I don't know how many times everyone has said that to me, 'if we saw a little bit of a pull back, I'd get to work right here, and buy some stocks."
"When it happens, when those pull backs happen, people just don't have the nerve to do it and now is the time to, at the very least, make your shopping list of things that you would buy if we get any kind of bounce here."
WBZ: What would you advise an investor to do?
Hogan: "The two things I would do is make sure your asset allocation is where you think it is. If you only look at this once a year when it's time to do taxes, you're probably out of whack, you probably have too many stock and not enough bonds, just because of what's gone on in the market over the last couple of years."
"The other thing is, if you don't have the stomach for this kind of volatility, we typically have these kinds of sell offs once a year. They usually don't happen this quickly, but on a percentage basis, about once a year, we have about a ten percent pull back, twice a year we have a five percent pull back. That's normal in the stock market. "
"The third thing – don't panic. There's never been a point in time where panic has been the right move in the equities market. This is not the time to be panicking. Ride this out for a couple of days, we'll see what the market looks like at the end of the week, not just this morning."
"If you've been sitting on a lot of cash, God bless you, this may be a great opportunity. If you're over-allocated on bonds, this might be a good opportunity to shift that over to equities as prices are certainly getting better. But we're also telling people it's not the time to be making drastic moves."
Listen: Hogan talks to WBZ's Deb Lawler: