LEXINGTON, Ky. (LEX 18) — Finally, something other than novel coronavirus (COVID-19) triggered a massive sell-off on Wall Street today. The sell-off came with an automatic 15-minute halting of trading once the S&P 500 dropped 7% soon after the opening bell. That’s called a “circuit breaker,” which is a checks and balances method that was put into place as technology began handling many of our trades.
So why did it happen this morning?
“OPEC wanted to cut (oil) production and Russia didn’t want to. Then Saudi Arabia surprisingly cut the price of oil, so that resulted in the price of oil being down 20% when the market opened,” said Ron Brown, of Ron L. Brown Wealth Management in Lexington.
Brown has been at his craft for about 15 years, and manages portfolios for several professional athletes. He is well-versed on the ups and downs on Wall Street, and what can happen when the market loses a chunk of its value, virtually overnight. He also knows not to panic, even if much of your retirement income is tied into the markets.
“This fluctuation is really not going to matter much in the grand scheme of things,” Brown said. “You go ahead and take your 3, or 4% you need per year, and let the market do what it’s done and come back. If they (retirees) don’t need that money in a lump sum, all of it at once, they’re going to be fine,” he added.
On the flip side, Brown would tell his clients, who aren’t of retirement age, to take advantage of some good pricing that’ll be out there in the wake of the Dow Jones losing roughly 5,000 points since the fear of coronavirus began to spread.
“If you’re buying a company that’s down because of coronavirus then you’re getting a steal, if you have time to wait it out,” he said, while stressing that investors need to maintain a diverse portfolio, never tying all, or most of their assets into one concentration.
Most of the fluctuation you see in the market is trader-based,” Brown said of those who earn their paychecks doing this type of work.
“Historically, things are going to be fine. It’s short-term,” he said.
And the markets can be like a well-oiled machine. Corrections over time can grease the skids for healthy rebounds, and vice versa.