It was a day of nonstop action on Wall Street. The day after an 1,100 point decline in the Dow Jones Industrial Average, the stock market wavered back and forth before ending the day up 567 points.
Professors at the University of Southern Indiana say the average American should not worry about the plunge the stock market had Monday. They encourage investors to stay in it for the ride.
Economics professor, Dr. Sudesh Mujumdar says, “Even in absolute terms this was a big drop in the stock market and the previous drop was about half the amount of points, it was about 600 points.” Just after Brexit, the recent drop in the stock market could make the average American feel concerned about their current financial standing. Monday, the Dow plunged a whopping 1,175 points, making it the worst day for stocks since 2011.
USI economics instructor Tim Mahoney says many of those headlines scared some people away from investing in the market, but he says things are not as bad as they appear. Mahoney says,”People think that it’s the total coverage of the New York Stock Exchange, it is only 30 stocks and it peaked at 26,000 and it’s gone down now to about 23,000. ”
Other economists have some simple advice, don’t panic. That includes resisting the urge to sell stocks or switch up portfolios.
Mujumdar explains, “Because it’s too late at that point and so the advice that I gave then was that of course it’s a difficult time in the market. So if you’re in the market try to be in there for the longer terms, if you have a 401k don’t panic.” Economists also say the stock market’s volatility may not be done.
Mujumdar warns, “There might be some more volatility going forward as we’re transitioning with the new Fed chair we are transitioning ultimately in terms of how the politics might affect the stock market in terms of how we get budget deals if that happens or not.”
Tim Mahoney says it still may be a good time to invest in the stock market. He recommends people who start investing should do their homework, find the stocks they like, and stick with it.