The four most expensive words in investing are: ‘This time it’s different.’” So said Sir John Templeton, the legendary investor whom Money magazine called “arguably the greatest global stock picker of the [20th] century.”
But as Business Report details in a feature from the current issue, many investors get spooked when the markets are turbulent, even though a certain amount of volatility is inevitable. When asked how investors should react to recent market gyrations, experts generally respond with some version of “don’t panic.”
The world is not ending, insists Theodore Samuels, a Harvard-educated portfolio manager with Capital Group in Los Angeles. In fact, corporate profitability is strong and recent volatility has been below what one would expect at this point in the bull market, he states in a September commentary.
“After all, we haven’t had a 10% correction since 2011, which is unusual given the above-average gains we’ve experienced during that time,” he writes.
Which is not to say that there is no cause for concern at all, says Rajesh Narayanan, an associate professor at LSU in the Department of Finance and the MBA program. Global demand has slowed, emerging markets are not doing well, Europe is “in the tank,” and U.S. job growth has slowed thanks in part to low oil prices battering the energy sector.
While the worldwide economic crisis may be over, deep scars remain, Narayanan says, so it’s important that our expectations are realistic.
“You had a patient who had this massive cardiac arrest,” he says, “and you want them to run a marathon one month later. That’s not going to happen.”
Baton Rouge financial planner and portfolio manager Mark Simmons says he’s “not really concerned much at all” about the global economy.
“There are some bad things out there, but there are also a lot of good things,” Simmons says. “Which is always the case.”
Simmons says there likely are bargains to be had among companies whose stock prices don’t fully reflect the strength of their earnings and balance sheets. Andy Bush of Horizon Wealth Management suggests now might be a good time to consider buying stock in companies that aren’t going anywhere any time soon, like ExxonMobil, Chevron, General Electric or Johnson & Johnson.