Market swings won’t damage investments

Kyle Huizinga, Staff writer

Over the past two weeks, the stock market has had a turbulent ride. Records of both highs and lows have been smashed, and many are left confused about what the outcome of this volatility might be.

Many students have accounts invested in the stock market to help pay for school.

College investment accounts for families are often designed with “low-risk low-reward” investing strategies and allow for higher returns than standard savings accounts. Students whose accounts are linked with market trading may be worried about the stock market’s effect on their investments.

Despite the doom and gloom perspective of many news agencies, financial adviser and uninformed investors the stock market is healthy and functioning somewhat normally.

The stock market is entering what is known as a correction. A correction is where the market falls after a significant amount of growth, usually by at least 10 percent.

The market has not decreased by this amount but is approaching it rapidly and may be at that point soon.

Typically, this fall happens gradually over many weeks, but the conditions of this recent market lead to more abrupt change.

Initial reaction to a 10 percent fall in markets led many to feel apprehensive to have feverish flashbacks of the 2007 mortgage crisis and impending market failure. But the fall is not something to fear.

Stocks have risen to unprecedented levels over the last year, and the total market increase is 32 percent since the 2016 presidential election (even while accounting the dramatic nine percent decrease in the last two weeks). This means that many still will see substantial increases from 2016 to now in investment accounts such as college accounts and 401k’s.

So the question remains: Should you pull your money out of the market? Though no one can predict the trajectory of the market, especially with the current socioeconomic and political climate, the answer is it depends.

Holding stocks long term is still shown to be the best investment strategy, according to investment article written by David Goldman for CNN. The market is higher than it was a year ago and the volatility seems to be slowly dissipating.

This being said the federal reserve will also soon start raising interest rates, meaning that the rate at which companies borrow money will increase. This action will lower stock prices even further and increase investing.

An article about the federal reserve for the New York Times written by Binyamin Appelbaum shows that higher interest and the Fed issuing more bonds will give many investors a more stable place to hold their money as they wait for the stock market to even out.

Older investors, principally those near retirement age, should pull some of their money from the market and diversify their accounts to a more stable growth platform such as federal bonds.

Students should not worry about the current stock volatility.

Inflation remains stable, stock prices are still at a high even with the nine percent decrease, and many market analysts seem to believe that an investment boom will come shortly after the decline.

Many worry about another recession and may take drastic measures prematurely to avoid it.

This change is just a market expanding and contracting much like floorboards in winter.