Eyewitness News Brad Byrd speaks to Senior Vice President Thomas A. Ruder, at Stifel Ruder Investment Group.
BB: Welcome to indepth tonight. Are you a fan of roller coasters. There’s a doozy this week on Wall Street. After last week’s historic drop in stocks as a reaction to fears of the coronavirus outbreak. This week has been a much different story. Stocks jumped Monday, dropped back down Tuesday and today closed up again. It’s all over the place. Joining us tonight is Thomas A. Ruder, Senior Vice President at Stifel Ruder Investment Group. Thom good to see you tonight.
TR: Good to be here.
BB: I’m going to read what Ben Levisohn, a stock analyst for …said today. “The stock market is experiencing big swings, but they’re happening in a very wide range. As long as that’s the case, the moves are most likely noise. Don’t get too excited.” Do you agree with that?
TR: I would probably agree with that. I think part of the thing that we need to understand is that we’ve got a lot of emotion in the market. We’ve got the elections and people get very emotional about election issues. We also have the virus. That has been a big concern as well. With those two things combined with the market being at an all-time high, it just made the perfect… letting some steam off and receive the vitality. That’s what we’ve seen. I would mention to people when we see this kind of vitality. Historically the averages show that 56% of the time a year later the market is higher. 72% of the time the markets higher 3 years. 80% of the time the markets higher 3 years. The real key here is don’t lose your cool. Stick to your plan. Stay invested for the long term.
BB: Stocks seam to be fickle at times. The knee jerks reaction. For example, the jump today of 1100 points. Yesterday it dropped below a 1,000 as far as the loss. Joe Biden’s primary victories last night. That caused all this today. Where will we be tomorrow?
TR: Well most of the market gained today happened in the healthcare industry. The big threat was from the political perspective that healthcare was going to get a lot tighter, a little heavier handed regulation. The market was a little happier that Biden got ahead in the polling. Those are the thing I think really on short termbases that people get worked up about. On a long term bases it probably won’t make that much a difference.
BB: It’s so easy now these days
TR: its way too easy.
BB: All you have to do is log into your computer 401K. you don’t have to wait on those quarterly reports. That’s part of the issue people are too reactive. They need to take a longer view. I think if people take a longer view on things that would end up with a lot more money. Individual investors. it kinds what we were talking about earlier. I don’t think a lot of this is happening for people who have advisors. In the last week, I’ve had one client that did some selling. I have a lot of clients. I’ve been doing this for 44 years. So I think that’s kind of the proof that some people need a little hand-holding and a little education along the way.
BB: Let’s take a look at the board today if we can. This is called the big three. Obviously the dow. and the NASDAQ and the S&P. Numbers all high today. But what is amazing about this is how volatile this is because of the direction it was headed last week. Is that discouraging people to even look at stocks? The everyday man or woman?
TR: I think it might be discouraging to those who haven’t had a lot of experience with it. We’ve using it as a little bit of an opportunity to buy good quality companies. At reasonable prices that have been marked down. You don’t always see these 4 in half swings in the market. we’ve gotten pretty close of having the technical correction of having 10%. Those do occur on fairly regular bases in a year’s time. So that’s not something we get really concerned about.
BB: The …on Tuesday pumped some well potential optimism. Well, that backfired, why’d that happen?
TR: Sometimes the fed tries to do really good things. But they get caught up in the political process. I think with the elections happening. Right before the fed doing it. It just created some type of noise out there that you probably wouldn’t have other times if we hadn’t had the political environment that we’re having with elections. I think that’s a thing people get really worked up about. Get excited one way or the other.
BB: What do you tell that person, say like a couple that’s built up a nest egg over the years in the 401k. A few months ago they said were going to get er money so to speak. The distribution as you call it. In the spring right about now, what do you tell them?
TR: Well if it is planned right that’s the key. Normally that money would have already been set aside in a cash equivalent fund. It’s pretty safe and secure and wouldn’t be affected by the market volatility. The other thing is if people don’t need the money and they need to take a distribution. They can take an …. distribution and move the stock that they own directly out of the retirement account into their personal account. Those are the kind of things, the strategies you can use that the common individual, investor may not be aware of. So there’s a way to handle that situation. So people don’t really get hurt in those instances.
BB: And despite those numbers that we saw there, you’ve always said don’t panic.
BB: And think long term. That even applies to those individuals that are in the twilight of their years.
TR: Ya know brad I’ve been doing this for 44 years.
TR: I’m not exactly a spring chicken either. I still have my money in the equity markets. Especially today when you see interest rates as low as what they’ve been. It’s kind of ironic that I’ve been in the industry as long because I’ve seen interest rates at the highest they’ve been in history. And now I’ve seen interest rates at the lowest they’ve been. So we see both extremes. It really doesn’t change that factor that (pause) especially when interest rates are practically at zero. You can still get a good dividend from any stock between 2,2 in a half, 3 percent. That’s way better than what you’re going to get anywhere else in the market. The 10-year treasury yesterday or today was under 1 percent. Which broke a new record.
BB: Well I’m hearing the closing bell right now in my ear. Tom Ruder thank you soo much. It may be a bumpy ride but we’ll be interested. Again appreciate you lending your expertise.
TR: Thank you.
BB: We’ll be right back.
(This story was originally published on March 5, 2020.)