(FOX 26) - The Dow Jones Industrial Average started off the New Year with a huge plunge. While some experts are concerned about what this means for the rest of 2016, some big investors are keeping an open mind.
The fact that the headlines are reading "Worst first day of the year since 2008" have some people wondering what this means for their 401ks. But financial expert, Lance Roberts, as well as investor, David Zugheri, say it's too soon to be making drastic decisions with your investments and plans.
“ What I would say to somebody who is overreacting to what has happened today is to try to let your emotions stay to the side,” said Zugheri.
As a long time investor, Zugheri said the last thing he would do as an investor is look too hard into Mondays stock tumble, the Dow closing down at 274 points.
“It sets the first trading day of the year and to be down 1.2 percent does not leave a good feeling,” said Zugheri. “But whether or not investors go running for the door has yet to be seen. I mean we have a lot more trading days this year.”
But financial expert Lance Roberts said although investors should not make drastic changes with their plans after Monday’s numbers, they should also not ignore the market signs either.
“If profits, which have been deteriorating over the last four months, don't improve, this could signal a much weaker economic environment and market environment for the rest of this year. So investors should be paying attention,” said Roberts.
And as for those with 401k plans, Roberts said most people don't start saving until they are 40 to 45, so with less time to save means less time to adapt to bad market days.
“So what’s very important to pay attention to is that if you have a 401k plan, investment portfolio, or whatever the risk, right now is to the downside,” said Roberts. “And if you suffer a 20-30 percent loss that's going to take four to five years to get that money back, and that's four to five years you don't get back.”
Roberts said the market is dependent on profitability, which is impacted by many things including spending as well as interest rates. And he said at this point there is a lot to be concerned about
“As interest rates start to go up, that impacts the growth and profitability of the economy, which effects the stock market. From an economic perspective, the trend of the economy is getting weaker both domestically and globally and that will continue to drag on stocks and for the rest of this year potentially.”
But leave it to a long term investor to ease some of that concern by looking at the past, as an example of how 2016 “could” be a good year for the economy.
“What happened today is chicken feet compared to what happened in the late 90s,” said Zugheri. “This is nothing. If you look at all of the great investors, they didn’t make money at the tops of markets; they made money at the bottoms of markets.”
Both Roberts and Zugheri agreed the stock market is extremely unpredictable, and they don't know if Monday’s plunge is going to set the tempo for the year just yet.