(FOX 2) - Monday saw the stock market in shambles, with the Dow dropping 700 points. It's the biggest drop in 2019, fueled by the intensifying trade war with China.
"The fear of trade wars is driving this," said Kirk Cassidy, Senior Planning Solutions. "Trump came out and said he will impose more tariffs and I personally think he is going to continue pressing and if he continues pressing the way he is we may see more volatility."
So how should we react? We went to investment advisor Kirk Cassidy, based in Farmington Hills. His team, Senior Planning Advisors, specializes in preparing people for retirement.
Cassidy says the advice differs depending on your age.
"If you are younger, I think you need stay the course and have a diversified portfolio, maybe a slight over bias or a tilt toward US equities," Cassidy said. "The US is still the place to play and be, and I think this is just a blurb. I would be cautious not to chase headlines. It is a small pull back we have a little runway left. You have time, buy your index funds and stop looking at it don't be emotional about it."
If you are nearing retirement or have already dipped into your funds, he says it's okay to panic a bit, but don't pull your money out of the market.
"If you are 5 or 10 years from retirement, you need to be strategic where we put our assets to be more conservative and hope you have been slowly doing that not getting greedy after 10 years of a bull run," he said. "If you have retired in the first five to 10 years of retirement, make sure to take your income from accounts that don't have volatility. And we leave our growth bucket the money that is exposed to this volatility, the stock market, and we leave that alone, because it will come back, it just takes time."
In the meantime, President Trump has showed no sign of letting up on China - accusing China via tweet of manipulating its currency which he says, quote "Will greatly weaken China over time."
"We need to all stay unified, make sure we get through this trade war with a better deal then we have now," Cassidy said. "If not, it could be painful for many years to come."
With the Federal Reserve reducing interest rates, Cassidy said that it is a good time to buy a house or refinance, but be sure to not over-extend yourself.