By Colin Witman, Staff Writer
In the roller coaster that is the stock market, there are ups and there are downs. This past week one of the hard falls occurred as the market dropped significantly, thus leaving some investors worried.
Since November 2016 and the election of President Donald Trump, the stock markets have risen to all-time highs. Just weeks ago, the Dow Jones, a compilation of 500 different companies, hit an all-time record high. Even for the novice trader, Dow Jones is a household name, and a common site on any stock ticker.
The last major crash in the stock market occurred in 1987, commonly known as “Black Monday.” Investors are not living a horrific international decline of that proportion again, this market decline, as John Capozzola, president of the Investment Club, more commonly refers to this as a “correction.”
“These occur regularly, but in terms of scale vary,” said Capozzola. “Corrections allow for stocks to be more fairly valued; as demand may have increased prices past a reasonable value.”
With stock value changing hourly throughout a year, reasons for declination in value vary from day to day. In the most recent case of decline, the answer is found within the United States Federal Reserve.
“Stock prices will never inherently go up every trading day,” said Capozzola. “This was sparked by the United States Federal Reserve’s belief that inflation, or the depreciation of prices, may be picking up at a faster level than expected.”
The sight of inflation to any degree is not seen as positive for anyone investing with a long term investment such as a bond. With investors locking into a guaranteed long-term interest rates, inflation limits their buying powers because of the increase in price of goods and services.
While some investors might fear the sudden dip and the looming prospect of losing a profit, Jake O’Donnell, senior and chief information officer of the Investment Club, took a different approach to the recent events.
“Investors, especially college students should be investing for the long term and need not panic at a market downturn,” said O’Donnell. “It is important to remember that corrections are perfectly normal and healthy for the market and that in the long run the market always goes up.”
As the economy moves forward, and another day of stock market activity begins, St. John Fisher’s Investment Club will inform students about investing, stock market movements and economics every Thursday during free period in Salerno 103.