CBS analyst to investors: Stay calm in face of Monday plunge

People watch trading boards at a private stock market gallery in Kuala Lumpur, Malaysia on Monday, Aug. 24, 2015. Stocks tumbled across Asia on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector. (AP Photo/Joshua Paul)

WASHINGTON — The market plunge that began on Friday and is continuing into Monday could easily tempt an investor to panic. But CBS news business analyst Jill Schlesinger tells WTOP that panic is exactly what got this started. She says it’s time to keep calm and look at the upside. Yes, there is one.

Schlesinger said on Monday morning that the economic slowdown in China, the world’s second-largest economy, created a “fear factor,” leading to a sell-off. She adds that the stock market had been riding high for a long time.

“It’s been almost four years since we had a correction,” Schlesinger says.

A correction is defined as a decline of 10 percent from the recent high.

“We usually get corrections about once every year.”

Schlesinger said a combination of factors are contributing.

“I think there was a sense of ‘Global growth is going down; the Fed’s gonna raise interest rates; now we’re worried about this; we haven’t had a correction — sell, Mortimer, sell!’,” Schlesinger joked, referring to a line from the movie “Trading Places.”

She counsels caution and calm.

“Markets overshoot, both up and down,” she says, adding that the market had overshot to the upside recently.

“We had these companies climbing and climbing, even as companies were telling us that their earnings were slowing down.”

She says that investors often show “euphoria on the way up” and “fear on the way down,” and says you need to hold tight.

“Your job in the next days ahead is to battle that little devil on your shoulder and say, ‘Get out of here; I’m not gonna do anything. I’m hanging tough with my game plan; I’ve seen this before.’”

It’s not even a bad thing in the long term, she says. If you’re roughly 45 years old and contributing to a retirement account such as a 401(k) or 403 (b), “You’re happy today,” Schlesinger says.

It’s easy to forget that your fund is still buying, and a situation like today’s means you can buy “at levels we haven’t seen in 15 months.”

Schlesinger concedes that, as a former trader, “I get a little excited on the down days” and that “I know it’s uncomfortable.”

“This thing we call investing — it’s not a sport; it’s not an avocation. It’s something to take seriously and it always has risks. Sometimes we forget about that.”

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