Investors hold on

Published 10:41 pm Tuesday, August 9, 2011

The stock markets have taken investors’ emotions for a wild ride this week, but several local experts are advising most people to hang on and wait it out.

“Everybody has held tight,” said Rob Estes, a financial adviser with Edward Jones. “I’ve actually had some people buy stock the last couple days, which gave me a good feeling that this would be a short-lived correction in the markets.”

The Dow Jones plunged 635 points Monday in reaction to the news that Standard & Poor’s had downgraded the country’s debt from its prize AAA status. But the Dow gained back 430 points on Tuesday, partly in response to a statement from the Federal Reserve that it will keep interest rates low until 2013.

Email newsletter signup

Estes said he believes the fundamentals of the market still are strong and that the market will rebound as it has in the past. It’s also important to diversify your investment portfolio, he said.

Dennis Gartman, a Suffolk resident who publishes The Gartman Letter, a daily financial trading commentary he has written for more than 30 years, said ordinary citizens should not be concerned about the lowering of the country’s credit rating.

“It’s relatively inconsequential,” he said, adding that “There was never, ever a chance that the United States was going to default on its debt.”

He also supported the Federal Reserve’s promise that it will keep interest rates low for the next two years.

“The actions by the Federal Reserve bank today are phenomenally supportive of the economy,” Gartman said.

Suffolk treasurer Ron Williams also said the low interest rates will help jump-start the economy.

“It’s really a positive when it comes to the overall recovery of the economy,” he said. “They are obviously trying to stabilize the environment.”

Gartman added that the recent public debate over the budget served a positive purpose, because it showed the “making sausage” process of democracy.

“We washed our linen out in the public, and I thought that was laudable,” Gartman said. “It is no longer anathema as a politician to say we probably do have to tackle entitlements. Now, you can actually say that, and very soon the ones who don’t say that will be treated as lepers.”

Gartman said people with investments should continue doing whatever they were doing before. But, he warned, unemployment is not going to come down anytime soon.

“If you’ve got a high school diploma, you’ve got problems,” he said. “Get an excellent college education and you’ll do fine.”

On the government investing side, Williams added that the city’s investments are performing well for the current times, but are relatively low compared to historical standards. But, the city also is paying record-low interest on its borrowed money.

“We’ll continue to earn at market rates, which will be lower than historical levels, but we also borrow at lower than historical rates, too,” Williams said.