SAN DIEGO — The stock market took a major nose dive Thursday as fears over coronavirus rise.
The Dow dropped more than one thousand points in one day — the biggest drop in history. A financial expert in Carmel Valley says this drop could affect everything from your 401k to your mortgages.
Jim Kuntz of Pacific Wealth Management says the fear of coronavirus in China impacts our wallets here in the U.S.
“It was the most significant drop in a six day period than we’ve ever seen,” says Kuntz. “It was only Wednesday of last week that the market was hitting an all-time high and here we are now Thursday the next week and we got an 11% decline.”
He says that means an 11% hit to the stock market component of your 401k. He says investors and companies are worried coronavirus will impact their supply chains and their profits.
“This ‘flight to safety’ is the way we describe it,” says Kuntz. “Money exits ‘risk assets’ like stocks and lands in the ‘safe haven’ assets like bonds.”
But oddly enough, he says this stock market flight could benefit homeowners. Kuntz says as money moves into bonds, bond yields go down and take mortgage rates down with it.
“Which ultimately is a positive for the American consumer who know has the opportunity to refinance their home at a low interest rate,” says Kuntz.
Though some are raising concerns coronavirus could spark a recession, Kuntz cautions not to give in to the fear and hysteria.
“Ultimately, it comes down to how well your portfolio is structured,” says Kuntz. “And whether it is positioned in a way that it can weather this storm.”
Kuntz also recommends not to make any investment decisions based on fear.