Even as markets shook, many investors held steady

Generation X investors showed a pronounced preference for stocks during the downturn, with stocks making up $86 of every $100 in new and reallocated dollars. (AP)
Updated 17 February 2018
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Even as markets shook, many investors held steady

NEW YORK: This month’s sell-off for stocks marked the first big test of investors’ mettle in years. And many ended up doing exactly what the experts were recommending: Hold steady.
Even as stock markets tumbled around the world, putting a halt to an unusually calm and strong ride upward, many investors resisted the urge to sell in a panic and lock in the losses. Others plugged even more cash into their trading accounts after seeing prices for S&P 500 index funds drop by 10 percent within a couple of weeks.
At Fidelity’s retail brokerage, for example, customers continued to put in more buy orders than sell orders after the S&P 500 began falling from its peak set on Jan. 26. Younger investors led the charge into stocks.
“Millennials and Gen Xers are definitely taking advantage of these prices and taking advantage of the sell-off,” said Scott Ignall, senior vice president and head of online brokerage technology at Fidelity.
Experts typically recommend that investors stay the course when stocks go through a bout of volatility. Stock prices can suddenly bounce up and down, as they did this month when the S&P 500 followed up its worst week in two-plus years with its best week in five years. But stocks aren’t supposed to be short-term holdings, and they’ve historically delivered better returns than other investments when held for the long term, such as a decade.
Beyond that, many voices along Wall Street were encouraging investors to “buy this dip.” Worries about higher inflation and interest rates sparked the sell-off, but many analysts said they expected corporate earnings and the global economy to stay strong, which should help stock prices recover.
The buying likely played a role in what’s been a quick rebound for stocks. As of Friday’s close on Wall Street, the index had roughly halved its loss and is down only 4.9 percent from the record.
Consider what millennials customers were doing in their Fidelity brokerage accounts from Jan. 26 through Feb. 12, when the S&P 500 lost nearly 8 percent. Of every $100 in new dollars and money getting reallocated, $87 went into stocks or stock funds. That indicates an even stronger appetite for stocks than millennials had shown in the placid, record-setting year before the sell-off, when $75 of every $100 went to stocks.
Generation X investors showed an even more pronounced preference for stocks during the downturn, with stocks making up $86 of every $100 in new and reallocated dollars. That’s up from $67 in the prior year.
Older investors were also buying stocks, but at a lower rate than their younger counterparts, and at a lower rate than they had been buying at during the year before the downturn. Baby boomers instead put much more money into money markets and cash.
“Every investor is different, with different goals and risk tolerance, so it’s hard to say whether their activity is right or wrong,” Ignall said. But “having a plan, sticking to it and being able to adapt to that plan is the most important thing for our clients, and I’m glad they’re able to do that through these market conditions.”
Fidelity’s figures marry with data from others around the industry. Vanguard, for example, looked at how much trading individual investors and 401(k) participants were doing during the tumultuous run from Feb. 2 through Feb. 9. Ninety seven percent did nothing, with nary a trade.
At TD Ameritrade, younger investors also led the way in buying as markets tumbled. Through the first week or so of February, millennials deposited 1.5 times more into their accounts than Generation X and five times more than baby boomers, said JJ Kinahan, chief market strategist at TD Ameritrade.
All this comes with the caveat that many market watchers along Wall Street are warning of continued volatility. After their unusually calm 2017, markets are bound to be jumpier given that the Federal Reserve is raising interest rates and slowly winding down the stimulus it put in place after the Great Recession.
Put another way: This sell-off may have been the first test for investors in a while, but more are coming.


Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

Updated 14 December 2018
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Libya’s National Oil against paying ‘ransom’ to reopen El Sharara field

  • Ransom payment would set dangerous precedent
  • NOC declared force majeure on exports on Monday

BENGHAZI: Libya’s state-owned National Oil Corp. (NOC) said it was against paying a ransom to an armed group that has halted crude production at the country’s largest oilfield.
“Any attempt to pay a ransom to the armed militia which shut down El Sharara (oilfield) would set a dangerous precedent that would threaten the recovery of the Libyan economy,” NOC Chairman Mustafa Sanalla said in a statement on the company’s website.
NOC on Monday declared force majeure on exports from the 315,000-barrels-per-day oilfield after it was seized at the weekend by a local militia group.
The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for NOC said, without giving an output figure. The field usually pumps around 70,000 bpd.
Since 2013 Libya has faced a wave of blockages of oilfields and export terminals by armed groups and civilians trying to press the country’s weak state into concessions.
Officials have tended to end such action by paying off protesters who demand to be added to the public payroll.
At El Sharara, in southern Libya, a mix of state-paid guards, civilians and tribesmen have occupied the field, camping there since Saturday, protesters and oil workers said. The protesters work in shifts, with some going home at night.
NOC has evacuated some staff by plane, engineers at the oilfield said. A number of sub-stations away from the main field have been vacated and equipment removed.
The occupiers are divided, with members of the Petroleum Facilities Guard (PFG) indicating they would end the blockade in return for a quick cash payment, oil workers say. The PFG has demanded more men be added to the public payroll.
The tribesmen have asked for long-term development funds, which might take time.
Libya is run by two competing, weak governments. Armed groups, tribesmen and normal Libyans tend to vent their anger about high inflation and a lack of infrastructure on the NOC, which they see as a cash cow booking billions of dollars in oil and gas revenues annually.