As the government shutdown continues and the debt ceiling looms ominously above us, investors on Wall Street are getting nervous. But a Chief Investment Officer with Wells Fargo says it doesn't mean your 401(k) is hanging in the balance.
Once a year, Wells Fargo Regional Chief Investment Officers come to Sioux Falls to meet with local investors. But this year's meeting is in the middle of a government shutdown and another debt ceiling crisis.
“The S & P 500 Stock Index is only about three percent below its all time high. The perception in the media is there's this huge problem, yet the market has hardly reacted to it at all," Regional Chief Investment Officer Cam Hinds said.
There have been 17 government shutdowns since the 1970s, but they've never caused the stock market to drop more than a few points and most of the time the market actually went up. Investors are now taking a wait-and-see approach.
"The consensus I believe right now is, 'We've seen this movie before from Washington.' There's this big issue out there. They will compromise at the last minute. The markets are waiting for the last minute compromise and if we don't get that, that is when you're going to see market volatility,” Hinds said.
Even if the markets drop in reaction to what happens in Washington, Hinds says that's not a bad thing because the market is up 20 percent from last year.
"With the market doing so well the past couple of years, naturally we're due for a correction. On average we typically have a 10 percent correction every 11 months. It's been over two years now," Hinds said.
Hinds says investors shouldn't make any rash moves in response to Washington politics.
"Focus on the long term. That's really where you need to be," Hinds said.
Hinds says investors should be less focused on the stock market and pay attention to the interest rates on bonds. If the rate on government debt spikes up, then we have a real economic crisis on our hands.