PITTSBURGH (KDKA) — There’s a downside to those low gasoline prices at the pump.
Sometimes what’s good for American consumers is not good for Wall Street where a drop in crude oil prices spurred another sell-off in the stock market.READ MORE: Third Stimulus Check: How Could The Economic Relief Package Put More Money In Your Pocket?
“As oil goes, so does the market,” Andre Weisbrod of STAAR Financial told KDKA money editor Jon Delano on Wednesday.
“There’s a reaction there. Whether it’s sane or not is questionable, but there is a lot of irrationality at this moment.”
With crude dropping to $27 a barrel, the Dow Jones plummeted more than 550 points before staging a comeback to close down more than 200 points, making the start of 2016 one of the worst starts ever.
“I don’t think anybody expected this. I don’t know of anybody who was forecasting something like this,” said Weisbrod.
Financial analysts like Weisbrod and Lou Stanasolovich, of Legend Financial, say, compounding the problem is an economic slow-down in China, less than stellar earnings from some U.S. companies, and much larger stock market drops in other countries.
“Around the world, including the U.S., people panic,” notes Stanasolovich. “Their portfolios go down a few percentage points, and they’re, ‘Oh, I got to get out, too,’ so there’s a rush to the exits.”
Unless you are about to retire in the next year or so, some say don’t look at your 401K, or if you do, take it in stride.READ MORE: Allegheny County Emergency Rental Assistance Applications Available March 15
“One of our clients was in this morning,” said Stanasolovich, “and said, ‘Hey, it goes up and goes down, but long-term it’s up. I don’t worry about it.’ And she’s 75!”
So how long will this market craziness go on?
“I don’t think anyone can predict when this volatility will end,” says Stanasolovich.
But both Stanasolovich and Weisbrod say it does present opportunities if you control your panic.
“The old adage, ‘buy low, sell high.’ Emotionally, you tend to do the opposite,” says Weisbrod.
And Weisbrod predicts oil should stabilize eventually and the market regains the losses later this year.
“I think there’s a good chance we will do that,” he said.MORE NEWS: Allegheny County Awarded $21.8M Grant To Help Reduce Homelessness