Local financial experts weigh in on stock market drop
You could call it a blue Monday on Wall Street. At the outset, the Dow Jones Industrial Average dropped more than 1,000 points.
And with traditional pensions hard to come by, American workers rely heavily on 401(k) plans for retirement.
"It certainly is scary anytime you see the market down like this. This is pretty historic for the market to be down 1,000 points in one day, but by no means should this be panic," said Renee' Pastor, managing director of investments at The Pastor Retirement Planning Group of Raymond James & Associates.
Peter Ricchiuti is a finance and economics expert at Tulane University.
"The average investor should really just sit on their hands at this point. These things happen in the market - you're getting a correction in the market," Ricchiuti said.
China is the source of the stock market jitters.
"China has devalued their currency, their economy is slowing down and they're a big source of the demand for our products, and that's really what's doing it here," Ricchiuti said.
"This is not unexpected," Pastor said. "It's been over 46 months since we have had a 10 percent correction in the market, and those are normal types of ups and downs that happen in the market, so really everybody has been waiting for a correction - we just didn't think we were going to get it all in one time."
"We've had plenty of these little dips, and the best strategy is to just stay the course. In fact, if you're in a 401(k) plan, there is a little bit of built-in advantage, because when the prices drop, you're still investing the same amount each month, and you're actually buying more shares at those lower prices," Ricchiuti said.
Ricchiuti believes the investors who should be the most nervous right now are those with a lot of oil company stock.
"In fact, this is really nothing that has happened in the last few days. A lot of people in New Orleans are overly invested in oil stocks, and those stocks are down anywhere from 50 to 75 percent. That's the real story," Ricchiuti said.
"We don't believe we're entering into doomsday. We do not believe we're going into another recession," Pastor said.
And by day's end, the damage was only half as bad because the Dow rebounded some.
Experts said it is important to have a diversified portfolio of stocks and bonds.
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