Wells Fargo advisor says don’t panic over stock market

(Editor’s note: For several days, The State will profile a South Carolinian affected by the volatility in the stock markets. Today, we look at a financial advisor.)

John "Joe" Hodson

Vice president of investments, Wells Fargo Advisors

Columbia

This week certainly didn’t start as a stellar one for financial advisors. But — so far — it also isn’t the worst week in history either.

“I would say not as bad as we might have expected,” Hodson said. “After the big selloff on Friday there was a lot of concern about what would happen on Monday because investors have a weekend — and all last week — to think about it.”

The violent and volatile opening to Monday morning’s stock market created a wave of fear in investors. Tuesday’s session, which had the Dow Jones Industrial Average up most of the day before closing 200 points down, allayed some panic.

But investors certainly can’t expect to see things snap back to normal any time in the near future, Hodson said. “I don’t think we should expect to have a couple of bad days and then we’re off to the races again. This is perhaps the long-awaited 10 percent consolidation everyone has been expecting for almost four years now. I don’t know how soon we’ll see new highs — that’s anybody’s guess.”

It’s the duration of the lows that will, of course, determine the strength of the economy in the months to come.

“If we go several months in a declining market, then people are going to start feeling poorer — 401(k) balances have taken a pretty good hit,” Hodson said. “It’s not enough to be overly concerned, but if it continues people will start making serious decisions about discretionary spending and we may start seeing a slowdown in car sales, home purchases — big-ticket purchases.”

Young investors could look at the market’s current state as one ripe for opportunities and perhaps investment reallocations, including purchasing good stocks that have been beaten down, Hodson said.

“If someone is young and has no (current) need for the capital invested, then the idea is to stay the course or even consider opportunities that have become available as a result of the volatility,” Hodson said. “At this point it’s a very good time to sit down and talk to clients and see if they are comfortable with the way they’re invested. Right now it’s our job to encourage clients not to lose sight of their long-term objectives and not to panic at the first sign of trouble.”