Evansville economic expert reacts to stock market drop
EVANSVILLE, Ind. (WFIE) - There are growing concerns about the state of the economy with the stock market sliding to new lows since 2020.
The stock market keeps hitting new lows, while the prices of everything from gas to groceries keep going up.
Experts are calling it a “volatile market.”
On Friday, the S&P 500 index entered the bear market territory, a 20% decline from a recent peak.
The Dow Jones also dropped over 1,000 points, its biggest loss since 2020.
Old National Bank’s Chief Economist Matthew Finn says for now, investors should play it safe.
“Now is not the time, during market volatility, now is not the time, to take large bets,” said Finn. “Now is the time to take risk off of your portfolio.”
Finn says the past two years created a perfect storm for inflationary pressure.
Putting a lot of money into the economy to improve it during peak pandemic, the economy then opening back up, and the crisis in Ukraine causing an imbalance in the costs of energy and food all contributing.
“The economy’s going to slow down,” said Finn. “We’ve jacked it up with zero percent interest rates and lots of money. When you pull that back, it’s going to take some time for the market to work through that.”
Despite the market’s unpredictability, Finn says don’t panic about your finances.
“Be disciplined,” he said. “Have a plan and stick to it.”
Finn says it’s actually a great time to stay in the market. For regular investors, when the market takes a dip, you’re buying low.
“Investors tend to panic sometimes and want to get out of the market when it falls, but if you have a disciplined plan, even if it’s not part of your 401K. If you’re just a regular investor in the market, now is precisely the time to keep after it,” Finn said.
History shows the market has been through worse, and Finn says it’ll recover again.
“We’ll work our way out of it, we always do,” he said. “There’s always innovation, there’s always something. We’ll work our way out of it, it just takes time. It’s way too early to panic.”
Finn says financial literacy is a big part of investing. He says most banks offer courses or videos that teach the basics of finance if you’d like to learn more.
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