The first prediction is that the downturn is likely to be significant.
Nashville, Tennessee (PRWEB) October 08, 2013
Investor Coaching Radio Show – With the stock market seeing record highs amidst waves of volatility during 2013, the popular investor is nervous about avoiding a stiff kick down the stairs for their investment portfolios, such as what happened in 2008.
Those who lived through the 2008 stock market and economic pummeling worry how long the current pattern of stock market growth is going to last. After all, the economy is still sluggish, so it’s not only stocks that people are nervous about, financially. So what should the typical investor do?
“Many of you want to know, ‘Paul, when is the next big market downturn likely to occur?’” posed Paul Winkler, president of a Nashville, Tenn. investment advisory firm, on Sept. 17, 2013, on his radio program on WTN 99.7. He addressed the concerns of investors who may be happy and nervous at the same time, despite the recent positive trends in the stock market.
Stocks have been doing very, very well lately. Things are looking good. When is the shoe going to drop? “I’ve got a couple of predictions for you,” Winkler began. “The first prediction is that the downturn is likely to be significant.”
“I know you don’t want to hear that,” he continued, “but it’s likely to be significant. The other thing is that it’s going to be accompanied by some really bad news. Possibly recession news, possibly news about some fighting going on somewhere in the world, and it is likely to result in double digit drops in stock values.”
Winkler is the author of the financial advice book, Above the Maddening Crowd. He is host of “The Investor Coaching Show” radio program, and his video blog appears, with his blog and podcasts from his radio show, on PaulWinkler.net.
The longtime financial adviser took some pressure out of the bad news, saying, “On the positive side, one of the things to keep in mind is that the recovery is likely to be equally rapid and unexpected. If history is any guide, the average amount of time it takes for stocks to completely recover from losses is about 111 days from 1946 until today.”
“Keep in mind,” Winkler said, “that bad news will abound even as stocks are going back up in value. And, most of the gains are going to occur in just a handful of days.” Winkler underlined the swiftness of the future stock recovery after the predicted future downturn by citing a significant trend over more than 40 years of market gains: “A University of Michigan study showed that, from 1963 until 2004, 96 percent of market gains occurred in just 0.9 percent of trading days.” Yes, those numbers show that, historically, almost all gains, when they occurred, happened in less than one percent of trading days over 40 years. “That’s pretty quick and hard to get in front of,” Winkler concluded.
Another prediction by Winkler, on the negative side, is that upon the coming downturn “most investors will pull out of stocks after they go down, and only get back in after they’ve gone back up in value.”
For those who don’t retreat from stocks in the downturn, Winkler offers a different, and positive, prediction: “Educated investors will avoid this trap, because the more you understand investing, the more you understand how markets work, you understand how the media plays on our emotions, and how Wall Street plays on our emotions. The more you understand that, the less likely you are to be taken advantage of.”
The financial adviser summarized, “It is the more educated investor that is the more confident investor, and ends up being the more successful investor.”
(This is part one of a two-part series on the coming downturn in the market, and what to do about it.)
About Paul Winkler of Paul Winkler, Inc.:
Paul Winkler, QFP, ChFC®, RFC, CLU, LUTCF, CASL, AAMS, is president and founder of Paul Winkler, Inc., a registered investment advisory firm located in Goodlettsville, Tennessee. Paul has been in the financial services industry since 1989, and has been published extensively in industry and mass media publications. In addition to being the host of the long-running radio program, “Investor Coaching Show,” on WWTN-FM, often Paul has been a guest on nationwide radio and television programs.
Paul's unique approach to the world of investing and financial planning stems from his strong belief that the traditional approach to the discipline is often driven by promoting financial products rather than by sound investment philosophies. Paul is the author of the book, Above the Maddening Crowd, which is endorsed by many financial teachers and university professors around the country.
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