What should you do about Wall Street's devastating dives? - KSWO 7News | Breaking News, Weather and Sports

What should you do about Wall Street's devastating dives?

Lawton_The week of October 6, 2008 was the worst week in the Dow Jones Industrial Average's 112-year existence, and on Friday, the average covered a range of more than 1,000 points for the first time in history.  By the closing bell, the Dow ended up down 128 points - far from the 700-point drop when the market opened on Friday morning.  Those who thought the Federal Government's $700 billion bailout package would create an immediate fix are discovering that it is going to take a while longer.

So, what should you do?

After 35 years in the business, Charles Young has seen the market take some pretty big hits, but each time - including this time - he has been confident that it would rebound.  He says the key for individuals is to make sure you are comfortable with your own investments. 

Young says that from wage and price control in the 70s, to the energy market collapse in the 80s, we seem to go through this about every 20 years.  He has seen the stock market weather everything - including the dot-com bust within the last decade.  He says there's a lack of confidence right now.  "A crisis in confidence as far as credit markets go, and the credit market is what this whole world runs on," he said.

Young says that banks and other lenders are fearful that they will not get back the money they loan.  "That confidence froze up, and the more institutions that did it, it spread quickly," he said.  "That's what happened to Bear Sterns, Lehman Brothers, Washington Mutual, etc." 

On a local level, Young says banks are safe.  Your money will still be there when you need it, and he says local banks continue to offer loans.  However, he also says that he realizes many people don't see it that way - especially after their retirement funds dip - or plummet - on the stock market.  "They just pull back and hunker down because they don't know what's coming - they don't what's out there because they don't understand."

He says that was especially true after investors heard that the government had come to the rescue of Wall Street.  But, Young says the money hasn't disappeared.  "The money is there, it's just getting it into the circulation."  Young doesn't suggest people back out of their stock investments altogether, but after losses and a loss of confidence, he does have some advice.  "They ought to liquidate 40, 50, 60, percent of their money to get down to where they can sleep at night and not worry about it," he said.  "They've only got 20-percent of their money in the market and the rest in a money market fund, and they can say, ‘If it goes down 10-percent, I only lost two.'"

Young also pointed out that the Federal Government has guaranteed money market funds through the end of January, 2009, and that should ease people's fears of losing their investments.  He says one big area of concern at the moment is that the commercial paper market is drying up.  Many businesses rely on that market for 30-60 day loans to purchase products that they can sell in order to repay the loans.

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