Dow’s wild ride tests Valley residents’ nerves

Published:12:10, 8/6/11


By Karl Henkel


To follow the Dow Jones Industrial Average on Friday was to take a virtual, daylong roller-coaster ride.

After Thursday’s tumultuous 513-point stumble — it’s worst single day since Dec. 1, 2008 — the Dow ended up with a gain of 61 points, closing at 11,444 amid lower unemployment numbers and a reinforced global financial market.

But what a ride.

The surges started early. The Dow gained 122 points at the open thanks to a better-than-anticipated economic report.

The U.S. added 117,000 jobs in July, according to the Bureau of Labor Statistics, which caused the unemployment rate to drop from 9.2 percent to 9.1 percent.

By midday the Dow had lost 190 points because of the volatile markets. After word that Italy had agreed to fiscal reform, it quickly leaped to a 172-point gain.

Despite the rebound, the Dow has many Mahoning Valley residents, including Dave Benedetto, 58, of Youngstown, rethinking retirement.

“It’s not looking good,” he said.

Benedetto said he’s not comfortable with the current economic climate and said he may have to work an extra year before retiring.

A person must wait until he or she is 591/2 before drawing from their 401(k) without penalty.

“My retirement funds I have invested ... those are definitely on the spiral down, and you have to take a look at what you have and decide if you can retire. I’m going to work and maybe ride it out a little and retire next year instead of this year.”

Don Samuels, president of Samuels Financial Services in Boardman, said panicked investors should do anything but sell, especially with the Dow’s 1,300-point drop since July 21.

“They should be buying. When you buy a 401(k), you’re putting in monthly or quarterly,” he said. “The markets are low, and some of the quality investments are down more than they should be.”

Samuels said those who have a 401(k) and are near retirement should set aside about a year of expenditures in less-risky investments such as liquid assets and government securities.

“That way you’re not forced to sell stocks in a down market,” he said.

Samuels said the only adjustments that should be made at this point are investments.

“It’s hard to pull money out in a down market because you’re pulling money out at lower values,” he said.

Of course, life situations can vary, and many in the Mahoning Valley, such as Tayana Pannell, 40, of Youngstown, who is still a long way from retirement, worried about her retirement investments.

“I’m considering changing it, but I’m not doing anything right now,” she said. “I know even though this was a huge drop, the stock market fluctuates a lot.”

Pamela Yellen, author of New York Times best-seller “Bank on Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future,” said Thursday that a 401(k) is a toss-up and pointed to two market collapses in the last decade.

“The odds are really stacked against you,” she said. “For the average person, it’s a very, very tough way to grow a nest egg and financial security.”

Even those without a 401(k) said the volatility of the markets are simply too much to make an investment risk.

Brad Cheatham, 52, of Youngstown doesn’t have a 401(k) but said the spiraling stock market has impacted his retirement plans.

“My lifestyle — everything has changed,” he said. “It’s not the same out here. A buck is harder to make. It’s just unstable.”


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