Illinoisans urged to be calm during economic hard times

March 17, 2008 8:56:11 PM PDT
In Chicago and across the country, people are trying to avoid the word recession. The more investors fear, the less the economy moves out of this - whatever you want to call it. Their advice is to not make any drastic moves.

The Federal Reserve is battling a crisis in the country's credit markets.

The government stepped in over the weekend to save investment bank Bear Stearns. But is that enough to prevent an economic meltdown?

Trading gets louder the closer it gets to closing at the Chicago Mercantile Exchange as the volatility of our economy continues. The uncertain times lead many investors looking for a way to protect what they've got - but what's safe?

"If you're very cautious, everyone's cautious now, I mean you're crazy to go out and buy anything," said Marie Fioreto

"Hold on to all my money and yes, definitely think about drawing dow my investments," said Cornelia Stanton.

"I'm not pulling anything out of the market because I think everything's cyclical, but I wish it was a little bit better," said Bob Strauss.

The state's treasurer urged calm and patience.

"We need to be strong, keep investing, while you're doing it, keep your money in your financial institutions. Taking that money out and putting it in a shoebox will do nothing for yourself and will do nothing except for damage the economy even more," said Alexi Giannoulias, Illinois State Treasurer.

Financial advisor Bill O'Donnell says most clients want out. He advises a compromise to ease concerns.

"If the stock is a solid stock, don't sell it. Take the profit, go back to your bases, and it will go down again, but in my opinion, it will go back up," said O'Donnell, William T. O'Donnell & Associates.

The markets may be good for something: a great real life lesson. Dr. David Mirza is an economics professor at Loyola University's School of Business. He says the best action may be inaction.

"Maybe the statistics will show that we're actually in a recession now, probably so. It will affect all of us. Now, the question is, how do we react during this recession? Do we say 'Oh this is a terrible recession it's going to become a depression.' Then we have a problem," said Mirza.

Mirza says the cuts made by the Federal Reserve Bank and efforts to stimulate the economy are moves to avoid the economy getting worse. But the important part of what happens next is up to all of us. Fear could tip the scale but calm, continued investing could right the ship.

Many small investors are overwhelmed by what's going on. And while it may be tempting to get out of the stock market, many experts say there's no reason to panic.

It was the regular monthly meeting of the Bluffers Investment Club in Elgin. And despite the volatile stock market, the mood there was calm. The group is invested in about a dozen stocks and they've done pretty well by going the conservative route, choosing solid companies and sticking with them.

"We stick to our principals," said John Kleczewski, Bluffers Investment Club.

Experts agree. They say now is not the time to panic.

The group ranges from retirement age to quite a bit younger. They follow a Democratic process when choosing stocks with a majority vote, they follow guidelines

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