Bombings Send Stocks Into Tailspin
Posted August 21, 1998 7:00 a.m. EDT
RALEIGH — Financial experts say two emotions drive our markets: fear and greed. The bombings by the U.S. created that fear, subjecting investors around the globe to a roller coaster ride. Money managers stress you can keep the ups and downs from damaging your savings by not following the pack.
Your money is in the market, mutual funds and IRAs. But international crises, like the latest bombings by the U.S., rattle stock exchanges all over the world, where your investments are tucked away.
So why do markets do this? Financial experts say military confrontations create investor uncertainty, causing panic selling.
"One of the comments that I heard about the bombings were that people would travel less as a result of that," said financial planner Jeff O'Quinn. "That could very easily have negative ramifications for airlines, for companies that do business overseas."
However, investment pros say these knee-jerk stock sales are often made by short term investors. People in the market for the long haul don't need to worry.
"The best advice is to turn the TV off, and take a little walk," stock broker David Kluger jokes.
It's also important to note that most stocks bounce back after a market-moving international event.
"When desert storm came out, that first of all probably shocked, you know was a big shock, and caused the market to really dive," financial planner Ben Micham explained. "But over the long term I think, everything came out pretty good."
There are other events overseas that worry the investment community just as much as our battle with Islamic terrorists. Analysts are keeping a watchful eye on the prolonged economic slumps in the Far East and Russia, as well.