Local students learning from market fluctuations

CHICAGO On Thursday, the Dow industrials ended the day up 410 points. That was after a 450 point loss Wednesday. Most experts are telling investors to hang in there. But many wonder how long will this last?

Rolling with the punches is easier said then done. We hear from experts to stay the course with our financial plans, but for how long? And how much loss can we bare? Experts gave ABC7 some perspective from markets past and present.

Business students at Loyola University have the advantage of learning from real life.

"My private finances, - I don't really have any right now on the positive side. But it'll definitely change. I'll be more skeptical and a lot more conservative," said Doug Dvorak, Loyola University junior.

Most students don't yet have to deal with the reality of volatile markets. But the rest of the world is not so insulated from market changes. Economist David Mirza says history shows the markets and the economy will rebound eventually.

"It will not take as long for us to come out of it. However, what we must be worried about is overdoing it," said Mirza of the Loyola University School of Business Administration.

Looking a few Dow Jones low lights:

  • October 19, 1987 - down nearly 23 percent losing 508 points
  • October 27, 1997 - down seven percent losing 554 points
  • After September 11, 2001 - down seven percent losing 684 points
  • And Monday - down four percent losing 504 points.
  • Professor Mirza says over corrections after 9/11, loosened credit and over simulated the economy contributing the current crisis. The key to the next rebound is cautious correction.

    "We don't want to overdo it," Mirza said. "Lower interest rates too much, stimulate the economy too much, it's steady as you go rather than dramatic changes in policy."

    Julie Casserly advised private clients and just wrote the "Emotion Behind Money." She advises that investors wait out the financial storm despite fear about current volatility. But she said she understands human nature and that for some, the bad news on Wall Street is more than they can bear.

    "When someone is really nervous, and they're reacting to the markets and a more fear-based position, that means that their assets are probably not aligned with exactly what their risk tolerance is," said Casserly.

    When clients reach that point, Casserly says, it's time to re-evaluate real tolerance for risk. She said she finds newer clients who have not seen big drops in the market sometimes adjust their plans after seeing the effect of volatility some of their investments.

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