It has been a rough week for Wall Street and investors–and it may continue–but advisors say they still are optimistic 2018 will be a positive for the market.

“The news is not that the market has fallen the way it has, but that it took so long for this to happen,” said Ric Edelman, founder of Edelman Financial Services and a prominent lecturer and author.  “We have been warning that this was long overdue, so we just sort of shrugged our shoulders” when it happened.

“Investors were falling into a lull from low volatility and high returns,” he said. “Our clients have been calling to ask if this is a buying opportunity, and it is.”

A few bumps, even big ones like the market has seen this week, should not upset well-positioned investors. Instead, “the thing that freaks investors out is the black swan: the event that surprises them, like a natural disaster or a terrorist attack. Anything that suggests instability is scary," Edelman said.

The important measure is not the number of points the market dropped but the percentage, Edelman said after the drops of the first weekend in February and the beginning of the week. At that point, it had been an 8.5 percent correction rather than the more traditional 10 percent, although the sell-off continued and technically became a correction on Thursday.

It is heartening at this point that the economy is still strong, said Andy Hart, president and chief advisor at Delegate Advisors in Chapel Hill, N.C., and San Francisco. “An 8 percent pullback puts us back where we were in December. Our role as advisors in this type of market is to educate clients to the fact that volatility should be expected. We have dialed back our clients’ risk over the last couple of years.

“Globally, everything seems to be OK,” Hart added. “There is no catalyst to make us think the global economy is going to shatter.”

Some fear of inflation is fueling the market sell-off, according to advisors. Increases in wages and the recently enacted tax cuts, combined with the just-announced government spending increases and an infrastructure package that is soon to be unveiled, will boost the economy further and may actually cause more bumps in the market, the advisors warned.

Tammy Surratt, founder and CEO of Legacy Family Office in Naples, Fla., noted that the current environment “is a little scary and tumultuous, but we are not surprised. The only surprise is that it did not happen sooner. A correction usually happens every couple of years. We believe this is a garden variety pullback and that there is still a lot of strength in the economy.”

Despite the reassurances, Scott Tucker, president of Scott Tucker Solutions in Chicago, said, “If a person is not working with an advisor, this is a good time to start.”

Tucker works mostly with retirees and near retirees who have little time to make up lost ground if there is a big downturn. “My folks are not concerned, but, in anticipation, we made a point of meeting with our clients last fall to let them know they are OK.” Most of Tucker’s clients only have 40 percent exposure to equities. “When your portfolio is already adjusted for risk, a downturn is not as scary.”

Investors were getting a little too comfortable with the steady increases in equities, noted Jeremy Kisner, senior wealth advisor at Survest Wealth Management in Phoenix.

“Everyone in financial services has been shocked at the complete lack of volatility prior to this past week,” Kisner said. The MSCI World Index increased every month in 2017, a feat that had never occurred in the previous 30 years, he said. “So, instead of taking a breather, the markets accelerated their growth in January. The S&P 500 was up by 6 percent in January, which sounds like a good thing, but we all know it was not sustainable. We need corrections to keep markets healthy and valuations in check.”

Investors need to make sure their portfolios are diversified, said Marina Gross, head of Natixis Investment Managers’ Portfolio Research and Consulting Group.

“With equities fluctuating by hundreds of points a day, investors should try to understand the risk in their portfolios and the extent to which they are varied and uncorrelated” to the market,” she said. “Although alternative investments are not immune from the swings seen in the markets in the last few days, they can do more to protect against losses and reduce or completely avoid market exposure.”

Volatility puts active management back on the table, said Cooper Abbott, chairman of Carillon Tower Advisors in St. Petersburg, Fla. “This downturn is not necessarily a bad thing. It sets up an environment that is interesting for stock picking, which helps differentiate advisors.”

Abbott deals mostly with high-net-worth individuals, who, he said, have a good perspective on the market. “This is an opportunity rather than a time to be afraid, although you want to be skeptical about the stocks you are choosing for a portfolio,” he said.

Passive management has gained popularity during the bull market, but “low-cost, passive products could end up being the most expensive things you could buy,” said Matt Schreiber, chief investment strategist at WBI, a provider of institutional and private client wealth management solutions based in Red Bank, N.J. “There is a place for both passive and active managers, but an investor needs to know what he wants and how his portfolio is constructed.

“We urge clients to revisit their investment strategy [before there is a major event], because if they make a move as a reaction to an event, it is already too late,” Schreiber said.

“Clients have to get their risk tolerance correct,” agreed Alexander Joyce, CEO and president of ReJoyce Financial LLC in Indianapolis. “Of course, the client wants to grow [the portfolio], but no one wants to lose.

“Communication is the key. Advisors need to be proactive and talk through this downturn one client at a time,” added Joyce, who deals mostly with retirees. “A lot of baby boomers are reaching 70 and a half years of age and are taking money out of the market” with required minimum distributions. “That piece of the market is bigger than you might think. But there is nothing out there that points to a big problem right now.”

“For advisors, this is an opportunity to sit down with clients and go over their reasons for investing,” said Brie Williams, head of practice management at State Street Global Advisors in Boston. “Emotions can get the better of us sometimes, but if client is self-aware about what their emotions are they can be disciplined in their investing.”

“Clients are looking for reassurance. This is a time to stay focused,” she added.

Clients also need to know a good run in the market cannot go on forever, noted Glenn Wiggle, an advisor with Peak Brokerage in Palm Beach Gardens, Fla., “This was the longest run in history without a 5 percent rollback. The higher the market goes, the greater the correction is going to be.

“In the 2008 recession, there was a run to cash,” he said. “We are not seeing that now. But a lot of people took the profits they have been making out of the market earlier” to use, so the market lost that money. ... There is also some uncertainty with a new Federal Reserve chair and what he might do,” Wiggle added. “But there is a good jobs report and markets have done just fine in a rising interest rate environment. With those things in mind, we feel it is still going to be a good market for the next few years.”

Brian Kraus, head of investment consulting at Hartford Funds, said in a statement, “Pinpointing an actual cause to the change in sentiment can only truly be done in hindsight. Fear of rising rates and implications to bond and equity investments and unexpected upswing in inflation readings” are two.

However, “recent market activity is disconnected from underlying economic growth [because] we remain on solid footing from a growth perspective,” he said. 

James Ragan, director of individual investor group research at D.A. Davidson & Co. Wealth Management, with offices nationwide, agreed there is little to worry about now.

“When 2018 began with not just a continuation, but an acceleration of the equity rally, most indices became overbought and increasingly vulnerable to the sell-off we are seeing now,” Ragan said in a statement. “Given a substantial increase in U.S. interest rates since year-end 2017 and increased market volatility, we believe that last week’s weakness could continue over the near term.”

However, “in our opinion a 5 percent to 10 percent pullback in the S&P 500 should be considered normal and would not disrupt a secular bull market for equities,” Ragan said.