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Today’s newsletter is from Brian Sozzi, Managing Editor and Host for Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
Monday, May 23, 2022
I remember very little of my life before I was 10 years old.
However, I vividly remember throwing a rock at a boy’s back in fifth grade, which I did for no other reason than my ability to throw things far and fast.
Said classmate turned around and smiled, before slowly approaching me and punching me in the face. I remember thinking at the time, “Gee, I should have seen this coming and protected myself.”
There’s no blood, but I won’t say it didn’t hurt. It obviously left an impression if I write about it 30 years later. And these days, investors could be paying the same.
Or, as Wall Street veterans tell me, investors were surprised by a tougher Federal Reserve, battered inflation that refuses to die an ugly death, and slowing corporate profits at major companies like Walmart and Target. All of this has created a “miserable” stock market environment that has led to “rotten” sentiment among investors, market strategist Steve Sosnick said on Yahoo Finance Live.
So what should you be doing right now with your investments?
Most likely your wallet has been hit. Most likely, his confidence has been shaken. Most likely, you are about to make some dumb decisions to try and win back all those gains in one session.
And chances are you’re wondering why you, like fifth grader Brian Sozzi, didn’t protect yourself before you got beat up in the face.
To this end, I give a thumbs up to the practical advice shared by Andy Sieg, president of Merrill Lynch Wealth Management, on Yahoo Finance Live last week.
I appreciated Sieg’s tone around this guide and how much sense it makes when everything seems as confusing as it is today, and encourage readers to consider his perspective carefully:
the story continues
“That is precisely the challenge in which everyone, when they open their [trading] statement, has that feeling [of not being calm]. And so, number one, we come to know what we own. And do we like what we have in our bags? Are we happy that our long-term asset allocation is consistent with the time horizon and the type of risk we want to take? To the extent that the answer to that question is yes, in some cases what you should be doing right now is making relatively modest portfolio adjustments.
Interestingly, one of the things that you can do right now, to the extent that you like your exposures, you like your asset allocation, you should think about selling some tax losses and take advantage of that right now. We get a lot of questions from clients about whether this is the right time to enter the markets. That’s where entering the market step by step, dollar cost averaging, is very important. So there’s a lot to think about right now.
But unfortunately, a lot of times, our instincts are going to, hey, let’s drop stocks altogether. Let’s liquidate portfolios. When you look back in time, it pays to be exposed to the stock market over time. Over the past 80 years or more, if you just walked out of the stock market on the top 10 days of any decade, your return over the past 80 years would be something like 50% cumulative. If you were in the market the entire period, exposed to stocks all the way, your cumulative return would be 21,000%. So, you know, that’s the risk of individual investors overreacting to this environment.”
As always, move strong and happy trading!
odds and ends
Yahoo Finance goes down in Davos
Yahoo Finance Editor-in-Chief Andy Serwer and yours truly will be present throughout the week at the World Economic Forum in Davos, Switzerland. It feels great to be back at this event, which is similar to my Super Bowl, after more than two years of absence due to the COVID-19 pandemic. And, of course, it comes against the backdrop of a free-falling stock market and a world facing a number of fundamental challenges.
Andy and I have a host of impactful interviews planned with global business leaders. Be sure to stay connected with us on Twitter (@Serwer @BrianSozzi) and on Yahoo Finance Live. Also, feel free to send us things you want to know about these powerful brokers. We’re here to serve you (and we’re not just going to take selfies with millionaires in the Swiss Alps, that’s not how we get around) and help you navigate the markets (and life) successfully. Here’s a short preview below.
what to see today
There are no notable reports scheduled for publication.
Zoom Video Communications (ZM) is expected to report adjusted earnings of $0.87 per share on revenue of $1.07 billion.
advance auto parts (AAP) to report adjusted earnings of $3.61 per share on revenue of $3.38 billion
nordson (NDSN) to report adjusted earnings of $2.29 per share on revenue of $646.90 million
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