“Buy low, sell high” has been the strategy for the Public Employees Retirement System, and PERS investment officer Ken Lambert isn’t flinching.
The market volatility “is giving us an opportunity to buy stocks low,” Lambert said Thursday, which turned out to be a good day when the Dow Jones industrials ended up 423 points to close at 11,143.
But for individual investors, there is a lot of angst, said John Sanchez of Sanchez Wealth Management, a financial adviser in Reno that handles $160 million in private investment accounts.
“You’re talking to two different guys, one that deals with institutional money,” he said. “I’m dealing with mom and pop that are seeing their life savings go up and down if they’re not managing it properly.”
For the fiscal year ending June 30, the retirement system reported a 21 percent return, with assets growing by $4.3 billion to end with a total value of $25.2 billion. It was the fund’s highest rate of return since 1986.
As of midday Thursday, total assets were valued at $23.7 billion, down about $1.5 billion from that high, but not a big concern for PERS, Lambert said.
“We’re going to take losses in a market like this,” he said. “But you set a strategy and you don’t change it much.”
Lambert attributed the wild market swings to an “overreaction” to last week’s downgrading of the U.S. credit rating by Standard & Poor’s from AAA to AA+.
“We don’t see it as much of an event,” Lambert said.
The Dow plunged 634 points Monday, soared 429 points Tuesday, dove 519 points Wednesday and rebounded 434 points Thursday. It’s the first time the Dow has ever had four straight 400-point days.
But for smaller investors, it’s a wild, white-knuckle ride. Sanchez said he’s never seen such rapid movement in 20 years.
“There’s no rationale to the fundamentals. Right now this market is moving headline to headline,” he said.
A number of Sanchez’s clients moved assets into cash or non-market related investments to avoid the turmoil before it started, he said.
For those who stayed in the market, his advice echoes Lambert’s strategy — buckle up and hold on.
“In this type of environment, it’s an emotion-driven market and it’s not the time you want to bail out,” Sanchez said.
Case in point — investors who cashed out on Wednesday missed out on Thursday’s 4 percent rebound.
As for bargains, Sanchez agreed they’re out there, too.
“If you have some fresh money to invest, there are some good deals,” he said.