During a significant down week for the stock market, individual financial investors were contacting their advisers and seeking second opinions about their personal portfolios.
Wall Street rebounded slightly on Friday, but for the week the Dow lost 6.4 percent and the S&P declined by 6.5 percent. The S&P slide was 1,136.43 points, which was the worst drop since the first week of August, when confidence was equally shaky.
Chris Nyhan, a Burnt Hills financial adviser with Edward Jones, said he receives calls from clients every day, but this week he has been especially proactive.
“I’m doing my best to call my clients before they call me … just to explain what’s going on,” he said.
In his conversation with investors, Nyhan said he is stressing that the current situation is different from the market downturn in 2008. He said the past week’s performance revolves more around emotions and noted that earnings for companies are strong.
“People are scared of Europe, there is no question about that,” he said. “However, indicators still point to a slowly growing, somewhat choppy, American economy, and that’s not the same thing as a recession.”
Nyhan added, “2011 is not 2008 … Corporate earnings are healthier than what the market really represents. I think that is the big picture.”
Cynthia Powell, a Niskayuna financial executive with Raymond James Financial Services, said she is also getting an increase in the volume of calls.
“Investors are looking for certainty,” Powell said. “They need to have confidence in the market.”
She suggested that investors are also looking to see the federal government take meaningful steps toward a balanced budget, which would indicate the country is moving in the right direction with its debt issues.
In some cases, individual investors are reaching beyond their personal adviser and seeking out a second opinion to reassure them that their portfolio is safe.
Jeff Clark, a Saratoga Springs financial adviser, said he has been getting some concerned calls from people who aren’t his clients.
“[I] haven’t talked to anybody in a panic mode, but a lot of people are saying they need a second opinion if they’re not my clients,” he said. “A review of everybody’s investment portfolios is wise at this time.”
Clark added that in turbulent times like these, he “accelerates” the process of calling his own clients. He gets to work as early as he can to talk to as many investors as he can.
Clark said there is likely to be more volatility in the markets, both positive and negative. He cited the positive gains before this bad week.
“Last week we had a rally based on speculation that the Federal Reserve was going to do something to juice the market,” Clark said.
Zack Vogel, a lecturer in the Management and Business Department for Skidmore College, noted that investors look to the Federal Reserve for guidance and react to what they gauge to be its level of confidence.
“The market was expecting some of this, but the Fed was a little more aggressive … than the markets expected [and] some people read this as a nervous Fed,” Vogel said. “It shows a fear of a double dip recession.”
“I think everyone is going into each day with a healthy dose of caution,” Vogel said.
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