Logan money manager optimistic, despite big sell-off on Thursday

Thursday when the stock market was hit with its biggest sell-off since 2008, the Dow plunged 513 points to 11,384. One Logan financial planner thinks there is a disconnect underway between Wall Street and Main Street. “Obviously 2008 and 2009 are fresh on people’s minds as painful memories,” said Mike Arnold of Edward Jones. “It is important to remember this is not 2008 and 2009. Corporations have a lot more regulations now and are in a lot better financial position. The valuations on most of the stocks are under historical norms. “Main street is just going through a fear thing, given what Washington DC has done over the past few weeks and months with this debt debacle.” Arnold said in investing, fear is a strong motivator and it can get away from you at some point. “I don’t think you have to view it through rose-colored glasses but there are reasons to be optimistic going forward. Rates continue to be low. Corporate America is sitting on about 2 Trillion dollars worth of cash. The lower dollar has actually provided a silver lining which is that higher exports overseas are doing really well.” The frustration in the government, said Arnold, is that corporate America is, in fact, sitting on that much money and not hiring people. “If you think about it why would anybody hire if you’re not selling their widgets? A lot of that goes back to consumer confidence, which is really low right now. A lot of people say it feels like we’re still in a recession, which technically ended a couple of years ago. And sometimes, perception becomes reality and that is sort of where we are now. As a result, there aren’t a lot of those major decisions being made, like buying a home or a car or refrigerator. Folks are making due with what they have.” He said another silver lining is that a lot of debt has been paid off and American households are a lot better off than they were two or three years ago. “In our economy right now we’re experiencing slow growth,” said Arnold. “It’s positive growth, but it is slow. A lot of people are afraid we are going to fall back into a recession. “Our best view on things is that we don’t think we are going to do that. There are those like Warren Buffet who view something like Thursday’s 500 point drop as an opportunity to look for some bargains.”

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