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Financial and Economic Crisis

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  • Description

    Rising level of stock market volatility is scaring retail investors and keeping them out of the market

  • Duration 4:24
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I so would this crazy Dow is very hard to figure out which is why would bring in people to help us bond ending in his with -- -- asked CEO Greenwich wealth management.

Thanks for being your first happy they're giving into the seconds people's understand that your client base is wealthy.

You know they are a back and even -- are still really concerned aren't thing.

No absolutely I mean everybody's concerned with what's going on on not just in the United States could -- -- -- to.

So this survey of 1000.

Mass affluent investors.

5250000.

Which isn't totally affluent by any stretch just -- the president's definition.

What are they say.

Yes right this is a survey that the Bank of America did and you -- fifty to 250000.

Is not people who are who are extremely wealthy right.

What these are people who are the backbone of investing there are a lot of these people and we need these people to be in the markets.

What's interesting is that the survey showed that there are growing more and more conservative in -- much more conservative.

Then they were a year ago when it comes to their investing so another reserve they're taking their money out of the stock market.

And it's because of -- everything that's going on beyond the financial crisis the economic crisis and also the increased volatility.

They're putting their money into cash they're putting their money into bonds which -- earning virtually nothing and their view is that I'd rather -- nothing.

Then lose money so they're really focused on preserving their -- rather than trying to grow them.

That's all that preservation of capital these days but as you say put your money in treasuries you get nothing.

I guess the stock market is even too risky for people these days.

Well you know its interest -- people always worry about the downside volatility yesterday we saw the opposite we saw the upside volatility.

Volatilities volatility doesn't matter what breaks up -- down just a mere fact that the market moves so much in one day.

Is enough to scare a lot of small investors and these are people that we really need in the market so these are people who are withdrawing.

Because of this volatility and what's what's particularly are concerning is that when when the market falls tremendously in a relatively short period of time.

These are the kinds of people who get out of the market and then they miss the -- -- so if you look at the month of November for example.

The market was relatively flat for November was down about half a percent for the entire month.

But from the beginning of the month to the day after Thanksgiving it was down seven point 6% that's an incredible amount of 11.

And then -- last three days alone.

It rallied seven point 6% so if you had gotten scared sometime in the middle of the month and -- on getting out of this market is too volatile for me.

You would have completely missed that helps -- And it's very important to remain in the market over the long term because the gains happened on only a few key days and if you miss those days you really -- your vineyards.

Saying that this little guy that's afraid is is doing just -- -- -- -- absolutely home with this little guy should have been doing ways when the market was falling.

They should have either been sticking with their plan they should make a long term plan and stick with it and they should periodically put more money into the market so they take advantage of dollar cost averaging.

So people who who had the guts to buy more stocks in the middle of November actually made money in November and even though the market was down have.

Personally you -- -- I think maybe that's part of it to people don't even know what to buying anymore.

Well the simplest thing to body is an index well.

So if you're not sure about what stocks to pick and a lot of all financial -- or financial advisors will tell the small investor.

Don't worry about picking individual stocks just get the market exposure you can just buy an index fund.

But my job was to pick individual stocks why do that for my clients my focus on individual stocks but ordinary investors could easily blown into the.

Means -- you're saying that over the long long the indexes are gonna keep going up.

Well if you look at if you look at history over long -- the index is always do go off there've only been at home very very few long periods of time by that I mean let's say ten years.

Where where the index was actually down.

We just have one when we came out flat that's right -- so.

You know so you hear stuff like that it makes you say well then why -- won't -- if I can't stomach the day -- day I'm just gonna end up flat.

You'll see that's that's a good point because because many investors look at and say we're women we just went through a ten year period of time where the market was down so I want to be out of the market.

Whereas more sophisticated investors look at that and say well what are the chances of that happening again I I wanna be in the -- -- and they take the opportunity given.

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