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Expert weighs in on why stock market has recovered despite daily swings

Posted at 8:40 PM, Jun 11, 2020
and last updated 2020-06-11 20:45:04-04

RICHMOND, Va. -- The stock market has been on a wild ride these last few months and Thursday was no exception with major indices down more than 6%, over concerns about persistent unemployment and a potential second wave of coronavirus cases.

But before that, it had come all the way come back from its lows in March. But was that recovery borne out in your 401(k) investments?

CBS 6's Bill Fitzgerald spoke with Sandy Wiggins, from the ACG Wealth Management in Midlothian via Zoom to find out if it has and why.

Bill last spoke to Sandy in mid-March when the market was down nearly 30% and he advised caution. But now there's been a rebound.

“We've seen a solid rebound in the stock market from our last segment, and really what's driving that is an expectation that the economy to recover sooner than originally thought,” Wiggins said. “And that's finding its way into stock prices.”

He showed a graph of the last 10 bear markets and its performance over the following 60-day period.

“The most recent 60-day bear market, really follows the typical trend, and in fact, at some points was rebounding even quicker than the average,” he said. “Remember, your portfolio is like a bar of soap, the more you handle it the smaller gets. Staying in the market and sticking with your allocation is crucial.”

As for whether the recovery thus far was broad-based or stronger in any particular sector, Wiggins said it’s easy to get distracted.

“Over the last 60 days there were pockets where large companies outperformed the smaller ones, that were really getting hammered," he said. “And then they recovered. So you should just make sure you've got a broad allocation, stay invested, and don’t try to pick and choose because there’s so much volatility and market noise.”

Wiggins also reminds investors that the market is not the economy. He notes that the economy reveals what has happened and the stock market is always looking forward, and pricing in future expect