Local advisers stress caution

While volatility rocked Wall Street Thursday, local financial planners characterized the instability as a natural part of the market cycle.

Investment advisers stressed the need for long-term investing, saying they haven’t received inquiries from panicked investors because of how they’ve set up clients’ portfolios.

“I really haven’t had any phone calls,” said Greer Gibson Bacon, a certified financial planner in Spokane. “Stocks have been above average in terms of valuation for a while now. There’s a lot of liquidity in the market place still, so it’s caused all prices to go up, so I’ve been very cautious.”

Markets traditionally are weak in August and September, and a 10 percent decline is a normal correction, she said.

“The people who are really nervous and upset right now are really people who were taking more risk than they were intending to” by chasing hot areas of the market, Greer said.

John Schram, president of the Spokane chapter of the Financial Planning Association, likened short-term performance concerns to “looking at financial pornography.

“Ultimately, with a well-thought-out plan that is designed to withstand the ups and downs of the normal and continual market turns, there should not be any worry whatsoever about any type of downturn,” he said.

Schram added that reallocating percentages of a portfolio on the fly does little to lower overall volatility.

Lew Sisich, an owner of Washington Investment Management LLC, said when markets perform like they have since mid-July, people engage in margin calls, selling even good investments to raise money. There is roughly twice as much margin debt today as in 2000, he said.

“I would look long-term and do not panic,” Sisich said. “If anything, look for opportunities to buy things when they start getting cheaper. And hopefully you have some cash ready to do that.”

The market unrest also didn’t surprise Wally Driscoll, a Spokane resident who coordinates a local investment club. He moved money out of the markets in May, and now may be the time to buy, he said.

“I frankly am optimistic that this is a natural correction,” said Driscoll, 60. “We, I think, for several months have been overbought. And I’ve been waiting for this to happen.”