Since the start of 2016, the United States stock market has been in the red.
The Dow Jones Industrial Average was down more than 500 points earlier on Wednesday.
As to why stocks continue to drop, the most common denominator is the continued drop in crude oil prices.
“And it (oil) is now below thirty dollars even on the international markets, which has made the stock market volatile also,” Alex Mills, Texas Alliance president, said. “So when you have such volatility in price, you are going to have uncertainty in the people trading stocks.”
That drop is blamed on a global glut of supply. The world is swimming in oil.
As that translates to the financial markets, local financial planner, Gary Silverman, said you need to put this latest downturn into perspective. It is definitely an adjustment from the highs investors saw in 2015, he said.
So what do you do in times like these to manage your personal finances?
“React to how this movement affects your particular situation – in your particular plan,” Silverman with Personal Money Planning said.
It is a rollercoaster that has the possibility to continue to drop.
“So a slowdown in energy is a slowdown in the overall economy until you have something that reciprocates a little bit — such as consumer spending,” Silverman said.
“The big question that’s on everybody’s mind right now is: How low will it go? And how long will it stay there? And when will the turn around begin?” Mills said.
In the meantime, Silverman said:
“For the money you need today – and tomorrow and next year – this can be scary, but that should have never been the stocks in the first place. For the money you are going to need five years from now and eight years from now and 10 years from now, stocks is an viable part of an overall balance investment strategy. And what its doing right now …. isn’t scary to me. And is pretty much expected,” Silverman said.
If you are thinking about buying because it is low, then he says ask yourself if you would sell the stock if it drops lower, because Silverman said that is not a good way to invest. People need to think long term.