Current bad market makes for strategic money moves

SHERIDAN—The economic effects of national events are reverberating through Sheridan County. Falling financial benchmarks have left individuals to sort out what it will mean for their pocketbooks, and it turns out that those who have some extra cash to play with right now are in a good position.

While coming across a roll of toilet paper or bottle of hand sanitizer on store shelves is difficult or impossible for many, those shopping for long-term transactions are met with a much friendlier market.

“There was a thing sent out to all of us from the Wall Street Journal talking about the worries caused by the coronavirus,” said Shiann Panetta, Loan Officer at First Federal Bank and Trust in Sheridan. “It has messed with stocks, so investors were not moving forward. There have been treasury drops, Federal Reserve cuts, and mortgage rates fell.”

Interest on a 30-year mortgage went down to a historically low 2.5% on Monday, a potential window to save thousands on long-term loans or refinances. It didn’t last long, though, as the rate fluctuates moment to moment. By Friday, rates had climbed back up to more than 3.5%. 

Panetta said because interest rates on loans are not permanent until they are “locked” in the contractual process, loan officers needed to act quickly to secure the best possible rate for their clients. Additionally, demand to take advantage of market conditions has caused her workload to doubled compared to this same time last year.

“We are so busy because we are doing a lot of estimates and checking,” she explained. “A lot of people are just checking and not closing loans, but they are thinking about if this is the time they want to do some remodels, buy a boat, or refinance.”

Title Officer at Wilcox Title and Abstract Jodi Ilgen said the buzz is starting to reach her industry as well.

“We are incredibly busy here with the interest rates being what they are,” Ilgen said, indicating the last time home loan rates were below 3% was around 2008. “It’s more than just typical seasonal bump. We are getting a lot of inquiries every day.”

Big buyers aren’t the only ones interested in taking advantage of an otherwise disadvantageous economic climate. Edward Jones Financial Advisor Greg Sloat said the upside to a down market is that everything is on sale.

“A lot of clients are buying if they have money available, but they are buying appropriate, long-term investments,” he said, adding that while the stock market’s behavior last week was technically unprecedented, but not necessarily deviant from usual historical behavior.

“We went from a 52-week high to a 52-week low in the market in a matter of 10 days,” he explained. “That has never happened before, but no one should be panicking as far as long-term investments.”

Sloat said national stocks, on average, go through some kind of low period every four years. However, it hasn’t happened in the past 11 years, which may have caused some people to complacently expect continuous growth. Therefore, short-term investments will yield disappointing returns, but those in it for the long haul will fare much better.

“When I’m talking with clients and they are the clients that have been working with me a few years, they’re not freaking out,” he said. “We have planned and prepared for this.”

Sloat also compared last week’s financial events to those that occurred around 2008. He said at that time, investors who sold their stocks at that low point missed out on an eventual 400% of growth.

“There are people still sitting on their money from 2008,” he laughed.

“If you look at the history of the stock market over the past 100 years, all declines or pullbacks have been temporary. We know it’s going to come back. We just don’t know when,” Sloat said.

Taking out a large loan or locking away money to grow is counterintuitive and takes a leap of courage in what seems like volatile economic times.  “We are wired to duck and hide when we feel threatened,” Sloat explained. “That’s the opposite of what you need to do for successful investment.”