China and Cheap Oil Sink Stock Prices
You probably saw some of those headlines as the New York stock exchange gave up more than 500 points at mid-day Friday.
Small investors are worried about their 401k’s–while the experts are warning against any knee-jerk reactions.
It happens every so often…a major shift in the stock markets that makes investors large and small squirm a bit.
JIM PLACE, MANAGING PARTNER, EVERGREEN ADVISORS "What’s happening today i to me, no more relevant that what the score is in the middle of the first quarter of a football game …it doesn’t matter."
The analylogy is appropriate since Place is a former coach of the Tennessee Vols.
The market slump is no surprise. Investors have been warned for weeks that China’s faltering economy and the price of oil was going to take a toll sooner or later. This was the day.
JIM PLACE "China concerns Wall street, because they are a big player. Wall street is also concerned about what you just mentioned..oil getting under 30 dollars a barrel…that’s an issue. I mean I know its good for us at the pump, but they’re concerned about that. 15% of our stock market is made up of energy stocks."
Although the price of oil is trading at its lowest level since 2003, Place says it will recover.
JIM PLACE "Oil’s not going out of our system for a long time."
The market has to recover, according to Place.
And his arguments for staying put are persuasive, especially in light of what happened to the markets in 2008.
JIM PLACE "What we saw in 2008..2009..which is ….I don’t believe what we have today. I mean we saw markets drop 40%."
Are there any bright spots in all of this gloom and doom talk?
JIM PLACE "The thing about stock markets…when you think about it..they’re incredibly unpredictable in the short term…they are incredibly predictable in the long term."
At the close Friday the Dow was down 391-points—the S and P was off 41.