Is it time to cash out of the stock market?

After a prolonged stretch of continual solid growth, we finally hit a bump in the road on Wall Street earlier this year.

For the first time since 2015, amid growing concerns about a possible trade war with China and rising interest rates, the Dow Jones Industrial Average dipped during the first quarter of 2018.

Do New Jersey investors need to be concerned?

Ken Kamen, the president of Mercadien Asset Management, points out last year investors got used to very little volatility as the financial markets seemed shrug off any type of bad news.

He said now that we’re seeing more swings, “it feels to some like a whole new world order. But everybody needs to remember last year the S&P returned approximately 20 percent and in the first quarter of this year it gave back approximately 1 percent of it, so the quarter was basically flat.”

Headline driven angst?

Kamen pointed out President Donald Trump has been talking about trade wars lately and that causes uneasiness, even though many believe this is only really a case of trade skirmishes.

He said the way the market has been reacting “goes to show that more and more of these computerized algorithms that are taking over Wall Street are really being fired off, if you will, by headlines.”

So what’s the bottom line here?

“Markets have been pretty resilient to all of this but also not only are corporate earnings doing very well and expected to do well, we haven’t even seen the effects of the corporate tax cuts roll through the reported corporate earnings yet,” said Kamen.

He pointed no one likes to see their earnings drop, but the market can’t just continue to go up and up without ever going down.

“You’re going to make yourself nuts if you keep saying well, I lost a thousand dollars in the last two months. Well, you’re not looking at the fact that you probably made 3 thousand dollars last year.”

So what’s the best strategy moving forward?

“I think investors have to really look at their portfolios and make sure they’re well diversified,” he said.

You can contact reporter David Matthau at David.Matthau@townsquaremedia.com