For those looking forward to smooth sailing on Wall Street in 2016, we have some bad news.
Investors are anticipating a rough year ahead. Nearly 75% of investors are expecting turbulence in the coming months and 16% say it will be “highly volatile,” according a new Wells Fargo and Gallup Investor survey of 1,018 U.S. investors.
If this investor sentiment pans out, it would extend what’s been a choppy ride in the markets over the past several months. On August 31, the Dow Jones Industrial Average fell more than 1,000 points within the first six minutes of trading to claim the dubious title of the largest intraday plunge in the index’s history. The index bounced its way back up, finally eking out a small loss of 1.4% so far this year. But it has left investors shell shocked.
“The markets could be in for a bumpy ride, which is why it’s as important as ever for investors to have a strong financial plan,” Zar Toolan, director of advice quality for Wells Fargo Advisors (WFC), said in a statement.
It appears many investors plan to heed that advice. About 44% of those surveyed plan to meet with a financial advisor, and 30% say they will pull out their checkbooks to buy stocks while prices are low.
That could be a good approach on both counts, given that wild market swings tend to only be temporary. Take August’s market drop as an example. Within two months, the stock market had more than made up for those losses. In fact, the average length of a stock market correction is 93 days. That’s tracing data all the way back to 1927.
So, even if it’s a bumpy ride, remember that it goes both ways.