Local Strategist Gives Options as 401 Ks Dive with Dow
CHARLOTTE, NC — Another dark day on Wall Street after an unprecedented 1,000 point drop to start the day. The Dow closed down nearly 600 points.
Monday’s losses were the eight worst single-day point decline and the second straight fall of more than 500 points.
Strategists say tanking stocks are causing tension between greed and fear.
People in the banking capitol of the South watched their 401Ks dive down with the Dow.
“‘The problem, of course, is for people who are in retirement and actually need this liquidity, need to take money out of the market,” said UNC Charlotte Finance Professor John Connaughton, Ph.D. “This is a tough time to do that.”
Dr. Connaughton explains concern over China’s economic slowdown kick started mass sell-offs Friday, knocking the Dow to its lowest in a year and a half.
“We’re going to see a very schizophrenic market,” said Dr. Connaughton.
He says the market will be up and down as people sell and others buy low while the Dow sits in correction mode.
For many, it means wait it out.
“This is nothing compared to what we saw in 2008,” said Dr. Connaughton. “That’s the lesson, 2008, 1987, whenever you see these big drops, if you don’t need the liquidity, and if you don’t need the cash now, and you just stick with it, in six months, a year, or two, it’ll be back where it is.”
When the market dropped 50 percent in 2008, he says hanging on three or four years was enough for people to rebound.
However, if you need cash now, Connaughton says, “If you have a portfolio that has a balance between fixed income and stocks, don’t touch the stocks. Pull what income you need out of the fixed portion, and let the stock rebuild.”
