DENVER -- On a day like Wednesday, the closing bell on Wall Street can sound more like an alarm. The Dow Jones dropped more than 600 points, wiping out gains for the year.
That has some starting to panic, but take a deep breath.
Scott Arnold, the CEO and portfolio manager for Colorado-based Impact Folio says Wednesday's big drop is an overdue correction in the market. A correction is a 10-percent drop or more from a recent peak, and it happens about once a year.
"Today's drop doesn't even hit the top 10 in the biggest daily drops in the history of the Dow. This year we're seeing more volatility than most other years. I think there's a couple of reasons for that. We had a really good 2017. U.S. stocks were up 20 percent last year. We didn't see a correction last year," said Arnold.
Arnold believes there are many reasons why the Dow Jones has dropped more than 7 percent this month, among them, fears about rising interest rates and trade wars. Arnold also says many investors may be moving their cash to the sidelines, waiting to see how the upcoming election turns out.
Arnold's advice? Hold tight. He says the best days in the market typically follow its worst days, and he expects a day with a 2-percent gain someday soon.
"Don't let your emotions take over. Moving the cash, in my opinion, is probably more risky and dangerous than sticking to your long-term plan," he said.AlertMe