Today, I was interviewed by Channel 8 News (in Las Vegas) about the current market conditions and the impact of the Chinese markets on Las Vegas businesses. Here are some of my answers to their questions:
1) The 450 point drop this morning had some people nervous. Were you?
No, not at all. I focus on the long term. I do not react to short-term volatility in the markets.
2) There are some who’ve been saying the market is in for a big correction. Might this be it?
There are always those who make predictions for a correction, but there is no way to know the future, especially in the short term! Future stock prices change based on new information, which is why they are unpredictable. Current stock prices reflect all of the information we currently have. The main thing to remember is that the market is volatile and unpredictable in the short term, but it usually goes up over the long term. That is why stocks deliver higher returns than low-risk investments such as bonds and CDs. You get paid more to live with market volatility.
3) There are several local companies heavily invested in China, such as LVS and Wynn to name a few. How do you feel about exposure to China?
Exposure to China is good in the long term, especially since it’s the second largest economy in the world. Just like any market, China will have its ups and downs. All markets have volatility, but that isn’t necessarily a bad thing, as long as you are diversified. For companies who are invested in China, they should focus on the long-term and not let these short-term “market winds” distract them from their long term strategy.
4) For those with a 401k or 403b plan, what is your advice when the market drops significantly?
My advice is as follows: Do not sell out of stocks. Stay diversified across all world markets. Invest cash into the markets as they are falling, assuming you have funds to invest long term. Hire a financial advisor to help you build and maintain a diversified portfolio and make good financial decisions.
About Christopher Jones
Christopher Jones is the Founder and President of Sparrow Wealth Management, a fee-only financial planning and investment management firm. Before entering the investment field, Chris was a management consultant for Deloitte Monitor. He graduated summa cum laude from Brigham Young University with a B.S. in Economics and a minor in Business Management.