Lehigh Valley

'Changing of the guard' spooks investors

The nation's 16th Chairman of the Federal Reserve, Jerome Powell, is sworn in and financial experts say the stock market is reacting.

First with a dip of more than 1,000 points last week followed by another 1,000-plus point plunge at the closing bell Monday.

The reason? Experts believe investors are spooked by speculation Powell will raise interest rates.

"But also because the stock market has risen so much, even this year, the market had been up almost 7 percent prior to last week. So I think there is some concern about valuation in some of the stock prices that we are seeing out there in the market today," said Bill Schultz.

Bill Schultz, Chief Investment Officer at McQueen Ball and Associates in Bethlehem, says a rise in rates could lead to slower economic growth.

But on the plus side, he says the Trump tax cuts and infrastructure investment could give growth a boost.

He says right now, investors are taking a pause to see what Powell does.

So what does all this movement in the market mean for your bottom line?

Schultz says it's an exercise in patience.

"I think it's very difficult to time the market. So I think you need to take an investment approach that diversifies your portfolio through the different asset classes as well as takes on a risk, your balance between stock and bonds that makes you comfortable with long-term strategy you put in place," Schultz said.

Schultz says if you are worried about your investments in the changing market, you might want to consult a financial advisor.

While the last two days have been scary for investors, Schutz says he doesn't see any signs that we are anywhere near a recession. He says this type fluctuation has happened many times historically and could actually lead to another spike in growth.

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