Many stock market investors were taken for a whirl last week, as they watched the Dow Jones Industrial Average drop 318.63 points, continuing the downward trend of the market.
Despite the Dow's upswing of 260 points Tuesday, many analysts said they don't believe it's the end of the decline.
"I believe it will continue to go down," said University of Memphis professor of economics David Ciscel. "(The market) hasn't hit bottom yet. I wouldn't look for real improvement until 2002."
Wall Street was tense last week, when the Dow reached 9504.78, which is an 18.9 percent drop from Jan. 14, when the market closed at 11,722.98. A drop of 20 percent or more would result in a bear market.
There are many speculations as to why the market has been experiencing such a steady decline over the past 14 months.
"Everyone needs to stay away from the 'shit happens' rule," Ciscel said. "There are a bunch of real problems that are plaguing our economy."
Some of the problems Ciscel identified were the decline in exports and the dot com industry's wave of pessimism that has discouraged many investors over the past several years.
In this "nowhere-to-run" market, the average investor has had to make very important decisions. Many investors, such as Dr. Thomas O. Depperschmidt, a professor of economics at The U of M, are sticking with their stocks.
"I'm just holding," Depperschmidt said. "And just hoping like everyone else."
Christine Jiang, visiting associate professor of finance, is also holding her stocks.
"If you don't need the money, leave it in the market," Jiang said. "By leaving it in, you have a chance of recovering."
Other investors are taking a different approach by taking their losses and pulling out of the market completely.
This is evident by the 25 percent increase in money market funds over the past year. Money market funds are where many investors "park" their cash between investments.
"The smart small investor should have pulled out of the market and moved their money into bonds and savings accounts," Ciscel said. "Because when the elephants start fighting, the chickens need to move to the fence."
A down market such as this is not all loss and heartache, but also is open for some real money to be made.
"If you are investing for the long-term, this is a good time to invest," Jiang said. "The stock prices are low and will most likely recover."
College-aged students are prime candidates for investing for the long-term.
"Younger persons have time on their side," said Rose Rubin, professor of economics. "(Young people) who want to get into the market for the long-term will get the real benefits."
As for those who are not invested in the stock market, they need not worry. The job market, overall, is excellent, despite all the layoffs reported by the media, Ciscel said.
