First: Don't panic.
Yes, we've all seen the news. The local share market has taken a hit today, playing copycat with Wall Street’s sell off overnight. You can read what I said earlier today about that here, but below are a few points I think worth reiterating:
- This is a pullback after the Yanks overbought stocks, and a buying opportunity is developing.
- Stocks are being sold off because of underlying positive news on the US economy. Unemployment is down, wages are rising, inflation is healthy. These things mean the US economy is strong enough for the Fed to consider further rate rises. This sell off is like a child throwing a tantrum after you’ve taken the training wheels off their bike because they’ve learned how to ride!
- Yesterday the S&P 500 had its largest drop since September 9, 2016. Of course we all remember that day ... not! Stay focused on the long term and ignore short-term punters. I am a long-term investor and I am confident with the state of the US, global and Aussie economy.
- Stock prices will go up and down in the short-term, but dividends will keep coming in. If you’re invested for the long term and reinvesting your dividends, a pullback really only means you’ll get more bang for your buck! And like I said yesterday, use these dips as a buying opportunity to add quality stocks to your portfolio.
- And don't miss tomorrow's episode of 'Mad About Money,' where Paul Rickard and myself will give you all the latest on this unfolding drama!
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