Experts: Stay the course amid stock losses; markets will rebound - Albuquerque Journal

Experts: Stay the course amid stock losses; markets will rebound

Copyright © 2020 Albuquerque Journal

Throughout his career, Ernie C’deBaca has been proactive when it comes to his 401(k) savings account. During his 36-year career at Public Service Company of New Mexico and in his current role at the Albuquerque Hispano Chamber of Commerce, he said he maxed out his 401(k) contributions when possible to boost his retirement options.

Now 66, C’deBaca said he was looking ahead to retirement on the horizon.

That is, until the recent market slide due to the new coronavirus threw a wrench into the works.

“There are unforeseen things that change in an instant, whether it’s your health and whether it’s your finances,” he said.

Since the market sell-off began in late February, C’deBaca said the value of his 401(k) declined by around 30%. Even knowing that the market goes through peaks and valleys, C’deBaca said he was surprised and frustrated by how quick the decline has been.

“It gives you pause. It makes you wish you had that crystal ball,” C’deBaca said.

C’deBaca isn’t alone. While stock prices broadly rose this week due in part to a massive federal relief package, stock indices remain well below where they were just a few weeks earlier. With millions applying for unemployment due to social distancing mandates, the possibility of more economic strife looms large for many investors.

Despite that, experts and hard data agree that your best bet is likely to stay the course – especially if you are not planning to retire within the next five years.

“Most likely, the best thing to do is nothing,” said Katie Taylor, vice president of thought leadership at Fidelity Investments.

However, Taylor acknowledged that the impact of the market’s volatility could have a bigger impact on those who have retired or plan to retire soon, and said those groups most likely should talk to an expert about their risk.

For longtime investors, the recent declines have conjured up memories of the Great Recession. But while that crisis brought steep stock market declines in 2008 and 2009, Taylor said investors were still better off sticking with their investments even through the worst of the recession.

“If you cash out on equity investments while they’re down … you’re buying those losses,” Taylor said.

Data from Fidelity showed that customers who sold stocks in their 401(k) plans saw their account averages grow 157% from 2008 through the end of 2017, while customers who stayed the course and kept their stocks saw 240% growth over the same period.

“Over time, we’ve seen that stocks do rebound,” Taylor said.

Manuel Montoya, associate professor of international management at the University of New Mexico, agreed with Taylor and said investors should avoid making rash choices in conditions of fear and uncertainty.

“You don’t ever want to make a market decision in those sorts of conditions,” Montoya said.

Taylor said Fidelity and other firms won’t know the extent of the impact on 401(k) plans until they finish tabulating numbers from the first quarter of 2020. Still, she said most workers are far enough from retirement that they don’t have much to fear from a short-term drop in stock prices.

Reilly White, an associate professor at the UNM Anderson School of Management, said the economy will likely go through several more boom-and-bust cycles before the average worker is ready to retire.

“This is a blip on the screen of your overall retirement potential,” White said.

Indeed, the recent downturn may end up being a blessing in disguise for younger savers.

Jay Shah, a 26-year-old digital marketing manager for Dreamstyle Remodeling, said his response to the downturn was to increase his contributions to his investment accounts. His logic is that he has a long time to go until he’s ready to retire, so it makes sense to buy when stock prices are low.

“At the end of the day, this is nothing but a blessing,” Shah said.

However, Shah acknowledged the situation is a bit more challenging for workers who are planning to retire within the next five years.

With a shorter timeframe, White said workers preparing for retirement may have to build up their cash reserves or delay retirement altogether.

Taylor added she would recommend that workers close to retirement take a close look at how much exposure to the stock market they have in their 401(k), and consider incorporating a higher percentage of bonds and other stable investments.

While Fidelity and many other firms offer tools to help members assess how much risk they’re comfortable with, Taylor said any worker contemplating retirement should get on the phone with a specialist to determine how to proceed.

“If you are getting ready to retire … that is definitely a sign that you should talk to someone,” Taylor said.

Home » Business » Experts: Stay the course amid stock losses; markets will rebound

Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email

taboola desktop

Meet some of the women powering New Mexico's cannabis ...
ABQnews Seeker
Several of New Mexico's largest cannabis ... Several of New Mexico's largest cannabis companies — and even some of the new players to the game — are led by women.
Q&A with the leaders of women-owned cannabis firm Vana ...
ABQnews Seeker
Women are making moves in the ... Women are making moves in the cannabis industry. And Parin Kumar and Riddhi Bhakta are part of that movement. Kumar and Bhakta are CEO ...
Horrors! New theme restaurant opens in Albuquerque
ABQnews Seeker
With its black painted walls and ... With its black painted walls and "blood" splattered tables, one of Albuquerque's latest restaurants is intended to be both an homage to '80s horror ...
New owners bring luxury to former Albuquerque budget theater
ABQnews Seeker
The newest location of Icon Cinema ... The newest location of Icon Cinema may be inside the former Movies 8 location on San Mateo, but according to cinema owner Stetson Snell, ...
Lawmaker accuses ABQ gas station of price gouging
ABQnews Seeker
Unleaded fuel listed at $6.83 per ... Unleaded fuel listed at $6.83 per gallon at M&M Stores on Yale and Gibson
First housing project for deaf, hard-of-hearing underway
ABQnews Seeker
Twenty-year effort takes its name from ... Twenty-year effort takes its name from the ASL sign for 'finally'
Albuquerque solar company reports $22M loss in Q1
ABQnews Seeker
Albuquerque-based Array Technologies has taken a ... Albuquerque-based Array Technologies has taken a beating since going public in October 2021 on the Nasdaq Global Market, with inflation and supply-chain challenges eroding ...
Stocks waver on Wall Street, hover close to bear ...
Stocks wavered in afternoon trading on ... Stocks wavered in afternoon trading on Wall Street Thursday as persistently high inflation continues to weigh on the economy and keeps major indexes mired ...
A bear market may be on the horizon. Here's ...
Investors on Wall Street need a ... Investors on Wall Street need a place to hide. The stock market's skid this year has pulled the S&P 500 close to what's known ...