Tuesday, stock prices recovered after Monday's record 777 point drop. But even though the Dow was back up, it is down substantially for the year, and America continues to watch the stock market very closely. NewsChannel 11's Brittany Pieper spoke with some local financial experts to get some perspective on the severity of Monday's market drop.
Watching the Stock Market plunge is scary for a lot of people, but local experts say we've seen things get this bad, maybe even worse, before. "You have a 777 decline in the Dow, so about a 7% drop, which the magnitude of that point wise is very unsettling to folks, and we don't want to negate that, but on October 19th, 1987 we saw a 22% drop in one day which would be like a 2300 drop today in terms of points. That would be serious, but we recovered from that too," said local financial planner, Mark Bass.
That's why Barry Orr, the CEO of First Bank and Trust in Lubbock, says he's concerned, but not panicking, about the current state of the economy. He's seen this before during the savings and loan crisis in 1987. "The bailout in 1987-88 was $500 billion, so really if you put it in perspective today's $700 billion, it's a lot of money, but it's just almost identical to that period of time," said Orr.
Orr's confident that even if there isn't a bailout eventually the market will turn around. But despite confidence in the market system he's still feeling the economic downturn more now than he did in '87. "In 1987 I was oblivious. I was young enough, new family, my biggest concern was you know, making sure my kids are taken care of," said Orr.
The markets may look similar to 1987, but Orr's personal life and personal investments are very different. "I've seen my retirement accounts drop by more than 60%, but fortunately I'm in a situation where I've got several more years to be working, and I'll get to see it cycle back," he said.
It really all depends on where you are in life. Orr says if you have time to wait it out, the market crashes probably won't have much long term effect on you, but people who are at or near retirement age have more room for concern. "Folks that have a relatively longer term outlook, and I don't mean like 20 years outlook. I mean if they've got three and five and ten years out, they'll probably look back on these times and say man, that was a tough stretch in the road, but we survived. The people that need their money now, that's a very key issue, and that's a tough place to be," said Bass.
Both Orr and Bass suggest staying in the market if you can afford to. Unless you really need your money now it isn't a good time to sell because the stock market is at a historically low point, and the experts say it should eventually go back up.
Local Reaction To National Economic Crisis
Even though there's been some panic on Wall Street following the House's rejection of the $700 billion bailout plan, local economists say people in Lubbock don't have much to worry about right now.