David John Marotta interviewed on CBS-19 after market drop

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David John Marotta on Charlottesville's CBS 19

Carter Johnson of Charlottesville CBS-19 interviewed local Charlottesville financial planner, David John Marotta, regarding Monday’s market drop. You can watch the video “Financial Advisers React to Credit Downgrade, Market Drop” or read a text account. There is much analysis of why and how to best structure portfolio against the hurdle and drag of sovereign debt, but it was the bottom line advice which made the air:

“The stock market is very quick at reacting to bad news, but it takes further bad news to push it lower,” said David Marotta, of Marotta Wealth Management.

Still, Monday’s significant drop has caused concern. A small portion of investors are considering getting out of the market and into what they think are “safer options”, like gold. Others are transitioning from stocks to cash and savings options.

Marotta says the best advice he can give is not to panic.

“One of the jobs of a financial adviser is to keep people from doing things that feel like the emotionally right thing to do but statistically are the wrong thing to do,” he explained. “Generally after a drop like this, selling is one of the worst things you can do. So sometimes we have to talk clients down off the ledge.”

I wrote after last week’s drop about the inherent volatility in the markets and why drops like these are not causes for panic or capitulation. And today Matt Illian wrote about how fundamental valuations are still attractive.

We still think this is a good time to tilt foreign, and then toward specific countries with high economic freedom and low debt and deficit. If the ground is rocky here in the United States, there are countries with more fertile soil overseas. But an even more fundamental commitment is to the business of business and staying invested in the engine of entrepreneurial growth, even if you were all invested in the United States. Market noise is just that.

It is always a good time to have a balanced portfolio. In the end, daily market drops – even as dire as today – are not reasons to abandon a good long term asset allocation.

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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)