Coronavirus fears have sent the stock market tumbling, with the Dow Jones dropping 1,100 points yesterday alone, and nearly 12 percent total over the past five days.
Tulane Professor of Finance Peter Ricchiuti says the virus has exacerbated a market that was already showing signs of weakness thanks to the US’s growing debt, the high price of stocks, and…
“The global economy has been slowing for the last year and the stock market is all about corporate profits and the slowing global economy has been taking a dent out of corporate profits,” says Ricchiuti.
Ricchiuti says the 12 percent loss is still shy of the 20 loss needed for the declaration of a “bear” market.
That might have older retirement investors spooked, but Ricchiuti says those close to retirement likely have moved more towards bonds, which is paying off right about now.
“If you see that, you might be surprised that the value of your bonds has gone up while the value of your stocks has done down, and maybe that’s a bit of an offset here,” says Ricchiuti.
Ricchiuti says younger investors should look to take advantage of declining stock prices by boosting contributions to their retirement accounts.
“So in the long run stocks tend to produce a great return, but only if you have enough time to ride out these big swings, basically the kind of logic that people have been talking about for the last 50n years, and it makes sense here too,” says Ricchiuti.
