Dickinson financial advisors give their tips in a down market, Oltmanns, Parke and Schneider help area investors plan in good, bad times
Financial advisors Klayton Oltmanns, Mike Parke and Steve Schneider work at different Dickinson firms, and have different investment strategies. But all three have the same advice for investors in today's volatile market.
Financial advisors Klayton Oltmanns, Mike Parke and Steve Schneider work at different Dickinson firms, and have different investment strategies. But all three have the same advice for investors in today’s volatile market.
“Don’t panic,” said Oltmanns, who is also a Dickinson city commissioner.
“Don’t panic, we are not going through another crash,” Parke said.
“Ride out the stocks. Don’t focus on the short term,” Schneider said.
Looking for value
Oltmanns grew up in Wyoming, and came to Dickinson to attend Dickinson State University. He has made his home here ever since, and has been with the Edward Jones investment firm for the past 10 years.
Edward Jones is an employee-owned, full-service brokerage company. The company sells stocks, bonds and mutual funds.
Oltmanns said the key to surviving the current market fluctuations is diversification. A client’s portfolio should be balanced among stocks, bonds and cash. And he regularly meets with his clients to review and rebalance their portfolios.
“You need to understand the individual investors and customize their portfolios to match their needs,” he said.
Investment strategies differ, depending on the clients’ investment goals, time windows for earning and risk tolerances.
A 60-year-old investor is concerned with preservation of assets and keeping ahead of inflation. But a 30-year-old is in a position to take more risks and pursue aggressive stocks.
“Thirty-year-olds have one thing money can’t buy,” Oltmanns said. “A nice time horizon.”
His clients are looking to add money to their portfolios in this financial downturn, as opposed to the financial crisis of 2008-09, when clients were selling off their portfolios. Stocks that have local appeal include Coca-Cola Co., McDonald’s Corp., MDU Resources, Wells Fargo & Co., and Whiting Petroleum Corp.
“This time, they are looking for value,” he said, “and are comfortable spending money.”
One asset that tends to be overlooked, especially now when many people are changing jobs, is a retirement plan. That is something an employee usually has, in some form or another. It should go with the employee when switching jobs.
“Don’t leave the retirement plan with your employer when you leave. Be sure to cash it out, and roll it over into an IRA,” Oltmanns said.
Moving away from bonds
Mike Parke is a financial planner and the owner of Mike Parke Investment Management, LLC. Financial planners manage clients’ portfolios, but do not sell individual stocks, bonds or mutual funds.
Parke was born and raised in Dickinson, attended DSU, and received his accounting degree from Minnesota State University Moorhead. He is a certified public accountant, and opened his firm five years ago.
His strategy for maximizing his clients’ investments in today’s market is to move all their holdings away from bonds and into dividend-bearing stocks. In January, the interest rate on a 10-year government bond was 2.08 percent. In that same time period, a dividend-bearing stock could earn 3.5 percent or more.
“This is the first time in a long time that I have no bonds,” he said. “In 1980, I had only bonds in the portfolios I managed. Now I advise investors to buy (bonds) on their own if they want them.”
He expects the stock market to grow slowly and steadily during the next year, and said the country’s gross domestic product is projected to grow 2.5 percent in 2016. The bond market, in contrast, may take six months or more to go up.
Parke advised 30-year-old investors to look at high-quality, growth-type stocks, since younger investors have a larger time window in which to grow their portfolios.
Retirement-aged investors should look at stocks that are less risky, and that pay dividends.
He said several sectors of stocks are overweighted right now. Overweighted stocks are attractive because they are valued higher than their selling prices. These include health care, telecommunications and consumer discretionary stocks. Consumer discretionary stocks are stocks from companies which produce goods or services that people can actually buy, like McDonald’s.
Parke said stocks that are currently underweighted include energy, materials and utilities.
If you want a stock, get it
Steve Schneider started Schneider Wealth Management, LLC more than two years ago. He moved to Dickinson when he was 2 years old, graduated from DSU, and has been in the investment business for 16 years.
Schneider recently finished his training to become a certified financial planner, and will soon take the test to complete his certification.
Schneider, like Parke, is an investment manager. He said investors need to look at the stock market from a historical perspective. The market is low right now, and the “buy low, sell high” idea is attractive. But low stock market prices do not mean that an investor should become too aggressive in buying.
“Look at risks, first and foremost,” Schneider said.
He said asset allocation and risk tolerance are the keys to smart investing. Asset allocation refers to the specific sectors of stocks an investor owns, and what percentage of the investor’s portfolio is allocated to each of those sectors. An investor with high risk tolerance would have a higher amount of his assets allocated to growth stocks than would a more conservative investor.
Schneider said preferred stocks are attractive, because their prices do not fluctuate as much as other stocks, and there is up to a 6 percent return on them. Local stocks that appeal to his clients are MDU Resources and Whiting, as well as other oil stocks. He advises investors not to wait for a stock to drop to a certain price before buying.
“If you really want a stock, get it. Don’t wait for it to go down 50 cents more. I’ve seen investors wait for a stock to drop that last 25 or 50 cents, and they miss out. There is only a 2.5 percent chance you will time the market right,” he said.
In the current financial downturn, Schneider reminds his clients to take the long-range approach.
“I tell them (their portfolio’s value) is just a number on paper,” he said. “You don’t actually lose money, or make money, until you sell. Look at the whole financial picture. Financial planning is key. That’s why I’m here.”