WESTCHESTER COUNTY, N.Y. -- As the stock market continues its roller coaster trading, most financial advisors are telling long-term investors to sit tight.
That's also the experienced-based advice shared by Charles A. Valenzuela, a native of Westchester and certified financial planner with PDI Financial Group, Inc., in Ridgefield, Conn. His broker dealer is Cetera Advisor Networks.
On Tuesday, the Dow Jones Industrial Average closed down 470 points -- or 2.84 percent -- as China growth worries slammed global markets once again.
Valenzuela cautions clients against overreacting to "sky is falling" media reports, which he thinks hurt more than help.
"It's critically important to determine time horizons and risk tolerance levels,'' he said. "Once established, an appropriate diversification of assets that meet the time and risk criteria is what I feel is best suited. Market timers are not necessarily the most successful over extended periods of time. Being reactionary can be dangerous.''
Valenzuela added, "For those in a longer time horizon for investing, sitting tight turned out pretty good in 2008 when the market dipped over 40 percent. Their investments grew back and far exceeded the pre-dip levels. Investor management is as important as investment management."
During these turbulent weeks, Valenzuela said he has advised clients "that the market is being very reactive to current media hype. The reality is that the U.S. economy continues to remain positive and that the pullback may be a good time to assess their risk tolerance. In fact, the pullbacks may offer buying opportunities."
Valenzuela said, "My advice at this time is to sit tight. Making drastic and short-term reactive moves would not be in their best interest. There are no economic indicators that we are anywhere near a recession. Again, this is a good time to measure the risk tolerance that our clients have and to make sure that they are realistic in their long-term thinking.
More excerpts from Daily Voice interview:
Valenzuela said, "I have not really heard any rumors from my clients, however, you can just turn on the TV and listen to the talking heads spout out the doomsday scenarios and you will have all the fodder you want for rumors. They tend to sell airtime rather than advice."
Daily Voice: Are you hearing that all should level off by next week?
Valenzuela: " Anyone who will tell you that it will level off is someone who, in my opinion, is prone to creating the rumors from your previous question. We really have no idea. These are completely different times than we have ever experienced in the history of our investment world and there is no time frame that we can place on predictions. The only historical constant is that if you invest in a diversified portfolio of investments that are appropriate to your risk tolerance, the chances of you attaining your goals are improved if you maintain the strategy."
Finally, what are the key contributors to the uncertainty in addition to the Chinese and Greek economies?
"Media, media and media," Valenzuela replied.
(Valenzuela is a Registered Representative offering securities and advisory services through Cetera Advisor Networks LLC, Member FINRA/SIPC. Cetera is under separate ownership from any other named entity.)