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Experts agree: Don't panic over stocks

But ND professor says tough times likely ahead for U.S.

by Jim Meenan
Publication: WSBT.com

August 8, 2011


If you covered your eyes when you looked at your 401(k) Monday, you probably weren’t alone.

On a day when volatility was again the buzzword on Wall Street, many in the Michiana area wondered just what they should do with their stock portfolio.

The Dow Jones industrials average fell 634.76 points.

It was the sixth worst point decline for the Dow in the last 112 years and the worst one-day drop since December 2008.

The answer from a banker, a financial adviser and a finance professor on what the average person should do, though, was pretty similar to what they have heard in the past: Don’t panic.

Jeff Bergstrand, a professor of finance in the Mendoza College of Business at Notre Dame, also believes in terms of the stock market, it’s time for caution.

“I’d say people don’t want to make rash decisions in this kind of free-fall market, because it’s a very volatile market so there’s some possibility it could bounce back up in the next couple of days,” he said.

But his optimism in the economy seems to end there.

“I would say right now that we are on the precipice of another recession,” he said, adding that a recession is contracting economic activity for at least six months.

It’s not just the stock market that has troubles, he said.

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