Plummeting stocks adding to economic woes

Stock markets drop sharply upon opening Thursday over fears of a COVID-19 resurgence
Posted at 6:20 AM, May 13, 2022

The stock market is seeing a major decline and investors are no doubt concerned.

This year, we've seen soaring inflation and record-high gas prices.

The stock market is plummeting as the fed tries to reign in soaring inflation.

The CEO of Wacker Wealth Partners in San Luis Obispo said the writing has been on the wall since late last year.

"It became very obvious early this year, stock market valuations were very high, inflation was high, we knew the fed was going to begin to tighten its monetary policy," said CEO Ryan Caldwell. "That has never been helpful for stocks."

Stock market volatility is certainly nothing new.

But to protect your bottom line, Caldwell added that the most important thing is not to panic.

"Our desire, our emotional response is to do something, and oftentimes, doing something is the worst thing that you can do," said Caldwell.

Selling off stocks can lead to long-term losses because the market will eventually rebound.

Another piece of advice from Caldwell is to invest in as many different kinds of stocks as possible.

It's also important to avoid investing too heavily in one industry, which can hurt you financially if one sector, is particularly hard hit.

"Individual securities can go to zero. Sectors can have a horrible performance but when you invest broadly in a diversified manner, your performance is going to be more rounded out," said Caldwell.

Experts noted the volatility in the stock market can also be an opportunity for new investors.

"You can think about it like getting something on sale, the market is more or less 20% cheaper than it was back in January," said Caldwell.

Tech stocks have been particularly hard-hit, but some health care companies and retailers did see gains on Thursday.

Some investors are concerned that the Central Bank could trigger a recession if it raises interest rates too quickly.