Wall Street is wrapping up one its whackiest weeks ever with the Dow Jones Industrial Average closing with a 400-plus point change for a fourth straight day.
The up-and-down volatility of the market has many Americans in a near-panic state about their 401k plans that many are depending on for their retirement. Winthrop University Economics Professor Dr. Bob Stonebraker advises people to calm down, take a deep breath, and ride it out. Stonebraker says cashing out your 401k could be dangerous for your long-term financial health.
Stonebraker says if you rode out the 2008 recession you would have done better and if you ride it out in 2011 you will do better.
He says those who invest in the market, including the small investor, must be prepared going in to recognize the volatility of the market and have the willingness to ride out those times when your portfolio takes a hit.
Stonebraker acknowledges that the long, drawn-out contentious debate involving Congress and the White House on the deficit and raising the debt ceiling and Standard and Poor’s action of lowering the nation’s credit rating has adversely affected the market. However, Stonebraker points out that the market now operates in a global economy and markets worldwide, especially those in Europe and Asia, have a significant effect on what happens in the U.S. and other markets across the globe.