Five reasons why you shouldn't panic about stocks

It has been a pretty intense January so far and we have been speaking with all of our clients trying to keep them calm during these times. Fortunately this is not my first rodeo. Over the years, I have experienced many up and down markets, and I do not think this will be my last.

Here are five reasons why I'm not worried:

1) It is reasonable to see a dip after seven years of fairly consistent high returns. An average loss for a negative year in the S&P 500 is 13.44 percent. Right now we are looking at a decline in the S&P of only 6.7 percent — so, this is not even an average negative year.

2) Oil is a net zero game — someone wins and someone loses. Right now, heating and transportation costs are down for consumers, and industries like retail, trucking, airlines and the auto industry are really benefiting from lower costing fuel. It's a change but it really is not that big of a deal.

This is not 2008—it's actually worse

3) China can't continue to grow at the pace it was growing, but 6%+ growth is still pretty good. That means that every 12 years their economy is doubling, which is still incredible. Just because their economy is not doubling every 10 years does not mean we are headed for recession.

4) U.S. companies and banks are substantially better capitalized vs. 2008. Prior to 2008, there was a term, "liar loans" that would refer to mortgages that required very little paperwork and you could put down whatever you wanted. Now try to get a loan and see how much paperwork you have to give them. My point is that the risk that banks and businesses are taking is a lot lower than in 2008, and that is a great thing.

5) Unemployment continues to improve – albeit slowly. Right now, we are at 5.4 percent and the U-6 rates (true unemployment numbers) are around 9.8 percent. While these numbers are not great, they are pretty good and heading in the right directions.

Oil could jump 30% or more in 2016: UBS

Having done this for some time now, I am a huge fan of doing the basics right:

• Live below your means and save on a regular basis though all types of market conditions. When things seems the worst, that is usually the best time to invest.
• Don't invest emotionally. Any emotional financial decision I have even made was a disaster, and it will destroy you long term. Develop a long plan and stick to it. It works.
• Don't listen to idiots (and they are usually the loudest). Listen to the people you know who are successful.
• The tortoise always wins! It may not be as exciting, but consistency pays off over time.

So relax and stop overthinking this. Everything is just fine!

Commentary by Jerry Lynch, a certified financial planner, chartered underwriter and chartered financial consultant (CFP, CLU, ChFC). He is president of JFL Total Wealth Management, a registered investment-advisory firm. Follow him on Twitter @JFLJerry.

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