Area financial advisers say market drop resulted from factors beyond election

Trader Frederick Reimer works on the floor of the New York Stock Exchange on Sept. 20, 2012. World stock markets fell Monday, Sept. 24, 2012 weighed down by a host of concerns about the global economy. (AP Photo/Richard Drew, File)

Trader Frederick Reimer works on the floor of the New York Stock Exchange on Sept. 20, 2012. World stock markets fell Monday, Sept. 24, 2012 weighed down by a host of concerns about the global economy. (AP Photo/Richard Drew, File)

The Dow Jones industrial average three worst one-day post-election drops since 1900, according to Bespoke Investment Group:

■ Election Day: Nov. 4, 2008

Winner: Barack Obama.

One-day loss: 5 percent.

■ Election Day: Nov. 8, 1932

Winner: Franklin Delano Roosevelt.

One-day loss: 4.5 percent.

■ Election Day: Nov. 2, 1948

Winner: Harry Truman

One-day loss: 3.8 percent

— President Obama's re-election Tuesday helped to send stocks falling Wednesday.

Yet investors need not panic, some area financial experts say.

The Dow Jones industrial average fell nearly 313 points Wednesday, closing at 12,933. That's down 2.4 percent — the fifth worst-ever day after a presidential election — but still short of the record 5 percent one-day drop Nov. 5, 2008, the day after Obama won his first term.

The election was just one factor in Wednesday's drop, experts said.

"About half of the country is disappointed in the election results and slightly more are pleased with President Obama's re-election," said Jason M. Perry, an Edward Jones Investments financial adviser, whose office is at Coconut Point mall in Estero. "But almost everyone is relieved the election is over."

Perry urged investors to avoid making emotional decisions based on Wednesday's stock market news. Just one day earlier, Tuesday, he noted, the Dow was up 133 points.

He recommended investors review their investment portfolios to make sure they are diversified, which mitigates risk.

Perry said the immediate concern from Congress to Wall Street is working to avoid what's known as the "fiscal cliff." That refers to the expiring Bush-era tax cuts and across-the-board spending cuts to the Pentagon and domestic programs.

Economists have said the "fiscal cliff" problem could push the economy back into recession if Obama and Republicans can't forge a deal to prevent it.

The tax cuts expiring — and defense and other spending cuts — would prove too much for the economy to bear all at once, said Andy Hill, president of Andrew Hill Investment Advisors in Naples.

He compared it to trying to lose weight; it's not healthy long-term to go on a crash diet. A more moderate approach is desired, "heading in the right direction when we eat right and start exercising more," Hill said.

A main priority is not repeating a "Lehman Brothers effect," he said, referring to the financial services firm filing for bankruptcy — still the largest in U.S. history — in September 2008.

"It's that one thing that happens and snaps the financial market and we're all broke in the morning," Hill said. "The chance of that happening now are less because we're so focused on that situation."

He said the Obama re-election was one-third of the stock market's reaction Wednesday. The "fiscal cliff" worries and a horrendous German industrial production report Wednesday were the other factors.

"Markets tend to overreact to political issues," Hill said.

Despite the stock market's reaction Wednesday, the finality of the presidential campaign isn't all bad, Perry said.

"The election did resolve some uncertainty, and that's good for investors," he said. "Your financial future is more likely to be determined by your actions than the election results."

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Comments » 2

RayPray writes:

""About half of the country is disappointed in the election results and slightly more are pleased with President Obama's re-election," said Jason M. Perry, an Edward Jones Investments financial adviser"

>>> Who would've thunk?

>>> When the Romans wanted to know what was what, they grabbed a chicken and called the local haruspex.

>>> Thank God we now have these 'financial advisers' to take care of this challenging job....

26yearsonmarco writes:

in response to RayPray:

""About half of the country is disappointed in the election results and slightly more are pleased with President Obama's re-election," said Jason M. Perry, an Edward Jones Investments financial adviser"

>>> Who would've thunk?

>>> When the Romans wanted to know what was what, they grabbed a chicken and called the local haruspex.

>>> Thank God we now have these 'financial advisers' to take care of this challenging job....

I refer to them as financial anal-ists

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