There’s More Than Just Stocks And Bonds

On the Trey Ware Show this morning, Karl & Trey discussed the stock market correction and whether or not it will last a while.

Trey Ware:                         So, on this question the LA Times is posing, “The stock market’s severe drop last week, is this anormal pullback or an ominous sign of things to come?” What do you think?

Karl Eggerss:                      Well A, it’s too early to tell, but B, so far kind of what you have alluded to is the reason it feels so crazy this year is because last year was the complete opposite and unusuallycalm. So, what we’re getting right now is a correction and if you look back, going all the way back literally a hundred years, the stock market at somepoint during the year drops about 13%, 14% at some point. We’re down about 10% from our high so far. So again, so far this is completely normal.

Karl Eggerss:                      Now having said that, what you talked about earlier about the economy starting to decelerate a little bit, I completely agree with. I’ve been saying that on the last few weeks on thisshow, that we are starting to see things slow a little bit. Now having said that, we’ve had several slowdowns since the great recession of 2008. Slowdowns don’t mean recessions and recessions don’t mean a financial crisis, and that’svery important for listeners to understand is that a slowdown is going to make stocks more volatile because the anticipation is, uh oh, what if it goes into recession and then what if things really get bad?

Karl Eggerss:                      So, I do think for people listening, they do need to realize this may be one of the first years in a longtime where stocks and bonds both finish down a little bit. They’re not down horribly but down a little bit, and so it’s important to really diversify, not just stocks and bonds. There’s tons of other investments that you should be looking at as opposed to just stocks and bonds, and if you do that, then you can take some of this vibration that we’re going through in stride.

Trey Ware:                         Very good. KarlEggerss, Eggersscapital.com. As always, you can check him out there and he’s with us every Monday at this time. Thank you Karl, we’ll see you next week.

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