A grim economic outlook has Southwest Florida financial advisors concerned for their clients even as the stock market finished on the rise Wednesday.
While experts generally agree the U.S. economy could be headed for more trouble, advisors have mixed reactions on whether investors should panic.
The Dow Jones industrial average ended with its first gain after eight straight days of losses — but many are predicting a volatile future in the stock market because of worries about the economy.
“There’s not a lot of good out there,” said Jim Applegate, the Fort Myers regional director for Financial Services Advisory.
The Dow closed with a gain of 30, or 0.3 percent, to 11,896. A nine-day losing streak would have been the Dow’s first since February 1978.
Even with the gain, the Dow has fallen 828 points, or 6.5 percent, over the past nine trading days.
Economists’ forecasts are turning dire upon news of slow growth in the first half of the year, and there are worries the U.S. economy could slip back into a recession.
David Morgan, manager of the Naples office of Raymond James Financial Services, said the negative outlook is raising fears of another stock market crash like the one in 2008.
“That difficult market is still fresh on everyone’s mind,” he said.
The economy started sputtering early in the year. Economists at first thought the slowdown would be temporary, but the weakness persisted.
The political fight in Washington over raising the debt ceiling — and fears the U.S. government wouldn’t pay back debts — was blamed for wreaking havoc on the stock market.
Applegate said conventional wisdom was that the debt ceiling compromise on Capitol Hill would stabilize the market, but still it dropped.
“Investors are confused as heck,” said Bob Matheson, CEO of Matheson Financial, an advising firm in Estero.
Given those predictions, Matheson and other Southwest Florida financial advisors are warning their clients to avoid jumping into a “doozy” of a stock market.
Each are telling their clients to be prepared for bumpy economy, but are giving different advise on how to handle it.
“There is a time for offensive and a time for defense,” Applegate said. “Now is the defensive time.”
Applegate called investing in bonds “a relative safe haven.”
Others are telling clients to avoid long-term bonds.
Matheson said investors should hedge against the economy until Washington politicians more strongly address the U.S. debt.
“Gold and silver are still good investments even at these prices,” he said.
Morgan is calling for investment in strong multi-national corporations with a proven brand such as Coca-Cola and Apple, which he calls “world-class companies that continue to turn out quality products and give back to investors.”
Coca-Cola led the Dow average higher with a gain of nearly 2 percent. Companies that depend most on an expanding economy in order to make profits had the steepest losses. Caterpillar Inc. fell 0.9 percent, the most of the 30 stocks in the Dow average, followed closely by Chevron Corp. and Boeing.
Morgan said Raymond James advisors have been doing some “hand-holding” with clients in recent months encouraging confidence and restraint despite the negativity from television news outlets.
“Turn off the TV; stop panicking and worrying,” he said. “If you’ve got a good portfolio this is a bump in the road.”
The Associated Press contributed to this story.