PITTSBURGH (KDKA) — It’s a bit like a roller coaster at Kennywood
After plunging over 500 points on Friday, the Dow Jones plunged another 1,000 points on Monday, only to recover a bit before day’s end.READ MORE: Erie Surgeon Who Has Battled Coronavirus Undergoes Successful Double-Lung Transplant At UPMC Presbyterian
Some local analysts call it a correction — meaning a 10 percent drop in the stock market without evidence of a recession.
“In fact, this is a normal course of the stock market that has been due for quite some time,” Rick Applegate of Cantor Fitzgerald told KDKA money editor Jon Delano.
Why is this happening now?
Fingers point to slower growth in China as triggering the correction.
“The concern is that a slow-down in China is going to lead to a much wider slowdown not only here in the U.S., but also globally,” says Carrie Coghill of Coghill Investment Strategies.
Not everyone agrees it’s a correction for Wall Street.
“The slowing of the Chinese economy is a correction for them. It’s not a correction for us. Our economy has basic value,” adds Bob Fragasso of Fragasso Financial Advisors.
But that still means at least a short-term drop in the value of our investments.
So why should your investment in the stock market, your 401K, your pensions, be tied to a totalitarian communist dictatorship in China?
Local analysts say we are tied to them economically.
“What happens in China does affect Pittsburgh,” says Coghill, “and you work for these companies, these multi-national companies that do business in China, or do business in Europe that does business in China. It’s all so interconnected these days.”
But Wall Street’s plunge may be more reaction than smart, since China, the world’s second largest economy, is still growing at double the rate of the U.S. economy.
“They’re overreacting,” says Applegate. “They’re acting emotionally when, in fact, it’s numbers that really matter.”
And all three local experts say just hang on.
“The U.S. economy, the world economy, has always recovered through all of the cataclysmic events of history,” notes Fragasso.
But in just three days, the Dow Jones dropped over 1,700 points, meaning that almost everyone with a 401K, pension or retirement plan, or just investments in the market has suffered at least a paper loss.READ MORE: Building Partially Collapses In Perry South
“I figure it will run its course, and it will be back up again shortly,” said one man on the street in Downtown Pittsburgh.
That’s the common view; although, there are others.
“It’s gonna crash. The whole world is gonna come down,” added another man.
Whether a pessimist or an optimist, you can’t do much about Wall Street, but you can do something about your own investments.
So what are local financial advisors telling their clients?
“It’s best when these events occur not to do anything but to allow time to pass before you make further decisions,” advises Applegate.
“Investors will hurt themselves by overreacting to what is a temporary volatility,” says Fragasso.
And waiting out the stock tumble may allow a faster recovery for your portfolio.
“The biggest increases in the market come immediately following the biggest declines,” notes Coghill. “You can’t time this.”
In fact, this may turn out to be a good time to buy low-priced stocks if you have some extra cash.
“This current down turn is, in fact, a buying opportunity,” says Applegate.
In many ways, what happens on Wall Street seems very removed from our daily lives here in Pittsburgh.
And local economists and financial advisors say maybe that’s not so bad. We all need to take the long view of these things.
Unless you plan on retiring in the very near future, local financial advisors say there’s plenty of time to make up the paper losses you have just suffered.
“This correction has been long overdue, and we’ve had events like this in the past,” says Coghill. “We’ve always recovered from them.”
“All in all, this is not a big issue to be concerned about in the long-term,” says Applegate.
“Absolutely, my opinion is that everything continues to recover and grow,” adds Fragasso.MORE NEWS: 94-Year-Old World War II Veteran From Allegheny Co. Finally Receives High School Diploma