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Color of Money: I feel you about the stock market swings

Michelle Singletary on

WASHINGTON -- I don't come from money. Not even close.

So, when I hovered my computer mouse over the link to view my 401(k) account late Monday, I took a pause, my heart fluttering. It was another day of deep stock market declines.

What would I find? How bad of a hit did my retirement portfolio take? I'm not going to lie: I said a quick prayer.

"Lord, don't let it be down too much."

The slide began last Friday, when the Dow Jones industrial average fell by nearly 666 points. Many folks made note of the significance of those three digits -- the number of the beast. And it has been a beastly time.

Monday set a record for the biggest plunge in a single day, with the Dow dropping 1,175 points. This was followed by a day of ups and downs, with the market closing on Tuesday up 567.

 

I probably shouldn't have looked at my account. Still, I clicked. The damage wasn't as bad as I feared, but it wasn't insignificant. Not when you come from an economic background where $500 is big money. Not when you are the first generation in your family to have money in the market.

Yet, I'm going to listen to the experts. In fact, here's what a few of them said when I reached out, trying to put in perspective the volatility we're seeing.

Greg McBride, chief financial analyst for Bankrate.com: "Markets have been addicted to low interest rates and global central banks pumping money into the financial system. As economies around the world are improving, this means higher interest rates and less stimulus from central banks. That's why investors are throwing a hissy fit. Not because anything is wrong. Let's look at the big picture: The economy is improving. If the market is falling, that means it's now on sale."

Carolyn McClanahan, a certified financial planner based in Jacksonville, Florida: "People should always be in the appropriate asset allocation, taking only the risk they can afford to take. This way, regardless of market direction, they should be able to weather the storms of market upheaval. Running for the entry when the market is up and the exit when the market is down is following the herd to the slaughter. Market pullbacks should be reminders to rebalance."

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