Hennion & Walsh Fixed Income, Securities, Asset Management
Parsippany, New Jersey -- Hennion & Walsh (http://www.hennionandwalsh.com)
The VIX number, often referred to as the “investor fear gauge” is typically 20 or less during less stressful, even complacent, market times. Conversely, a VIX level of 30 or greater is usually associated with a large amount of volatility as a result of investor fear or uncertainty. The history making number of 89.53 reflects vast amounts of volatility, fear and uncertainty that Hennion & Walsh is observing in recent investor questions.
“The questions ‘How should I invest now?’ and ‘Should I put everything in cash?’ are the top questions we are hearing from investors,” says Bill Walsh, President of Hennion & Walsh. “There is no one simple answer but investment goals, risk reduction and asset allocation are key elements in our response.”
“While bank savings accounts, CDs and money markets can help one sleep better at night, they can be terrible long-term assets because they will have trouble keeping pace with inflation over time,” continues Walsh. “However, for many investors, the prospect of a slight erosion of value due to inflation seems like a reasonable tradeoff given the drastic losses suffered recently by virtually every stock market around the world. Ultimately, the only way to beat inflation is to accept some degree of risk in exchange for an inflation-beating return. If your goal is to be a long-term investor, being out of the market presents more risks over the long term.”
Kevin Mahn, Chief Investment Strategist at Hennion & Walsh Asset Management
adds, “There are three steps every investor should take. First, the investor needs to work out his investment goals in a realistic way. These should take into account one’s age, dependents, marital status, occupation, and risk tolerance. This helps to determine if the investor needs funds for child education, retirement or a new home, and how much and how long one will need to invest to reach their goals.”
“Second, there are roughly 11 types of risks an investor should be aware of: capital risk, selection risk, timing risk, legislation risk, liquidity risk, market (systemic) risk –up or down due to the market as a whole, credit risk, inflationary (purchasing power) risk, interest rate risk, reinvestment risk, and call risk for bond holders. Additionally, one’s tax bracket and future tax ramifications of investments should be known and factored into investment planning,” continues Mahn.
“Third is working out the asset allocation of one’s portfolio, taking into consideration one’s investment goals, age, etc. This includes how much should be allocated to cash or cash equivalents, bonds, and stocks. It also includes working out specific strategies that will help protect one’s capital and reduce the 11 types of risk listed above while working to achieve one’s investment goals. This can be a full time job and if someone doesn’t have the time or expertise to devote to this, they should find a knowledgeable professional they trust to work with,” concludes Mahn.
Currently, oil prices are down, a new President-Elect appears dedicated to addressing the economy as a top priority, and the VIX is falling which may give investors a small ray of light on the horizon. However, this is not the time to relax. It is more important than ever for investors to take the above three steps to ensure their portfolios are set up to take advantage of future market conditions while meeting their investment goals in a diversified and strategic manner.
For more information visit http://www.hennionandwalsh.com or call (800) 836-8240.
Media Contact
Melinda Staab
1055 Parsippany Boulevard
Suite 304
Parsippany, NJ 07054
(973) 732-3521 - Office
Melinda@jcpublicrelations.com
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