Local investors react to AIG bailout

September 17, 2008 4:58:18 PM PDT
The battered economy continued to struggle Wednesday.A Chicago-area executive will try and right the ship for the AIG insurance company.

Shortly after the government announced an $85 billion bailout for AIG, former Allstate CEO Edward Liddy was given the top job at the insurance giant. But the financial markets were still reeling from the country's economic setbacks.

The bailout seemed to only add fuel to the fire. Watching the headlines may make investors uneasy, but it seems the savvy investors plan for times like this and are planning to jump back in when the water is calm.

It was a record day at the Chicago Board Options Exchange. At the close of business, 9.7 million contracts changed hands in a reflection of a volatile market.

At the exchange, they trade options - options to buy or sell stocks at a fixed price in the future.

There is even a pit that trades options on the volatility in the market. Brian Stutland trades in the volatility index and advises individual investors. As hectic as the trading floor can be, he advises patience to those on the outside.

"We have the Warren Buffett view. You have to invest with good solid fundamentals and stick with them," said Stutland of Stutland Equities.

Chicagoans were watching as the rest of the world has as seemingly daily news of financial giants in trouble emerges.

"You have to stay the course. It depends on your age, but you should stay the course," said Lance Lim.

"I'm pretty confident that it will pick up, yeah, not worried at all," said Kaneisha Barefield.

"I don't freak out at changes, per se. Hopefully it's all balanced and keeps going forward in the long run," said Bob Anstiss.

At Aequus Wealth Management, clients were getting newsletters from certified financial planner Cicily Maton about recent volatility.

"Looking at your account often at a time like this is probably not good for your decision making and not good for your nerves," said Maton.

Maton says most of their clients go into financial plans knowing there will be down days. She says the best investors take the emotion out of their investing.

"When times come like a 200-500-point down on the Dow, you can curb that emotional reaction by knowing that you've made sound decisions when you were in control of your emotions," Maton said.

Maton says for those who feel they need to take action in these volatile times, budget cutting may make more sense than selling investments when they're low. Some people were building up their savings, so when things are a bit more stable and good investments are more apparent, they'll be ready.


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