Chicagoans Want To Know If It's Time To Panic Over Wall Street
UPDATED 08/11/11 7:26 a.m.
CHICAGO (CBS) -- The message on Wall Street on Wednesday was simple: uncertainty. The see-saw at the stock market was giving consumers little confidence about the future of the economy.
And on Thursday, investors are bracing for the possibility of another roller coaster day.
After falling more than 600 points on Monday, then rebounding more than 400 points on Tuesday, the Dow Jones was back down more than 500 points on Wednesday.
But Dow futures were up Thursday morning. Regardless, more jitters and more action are expected Thursday, and analysts don't expect the volatility to let up anytime soon.
Traders Thursday told CBS 2's Roseanne Tellez to expect more volatility.
"It's just pure psychology. It's confidence," said Chicago trader Rocco Chierici. "Until people really fell that the governing bodies have a grasp on what's going on, things will be volatile."
And as CBS 2's Kristyn Hartman reports, investors wonder if it's time to panic.
The ride's been wild on Wall Street this week. It plunged, it surged and it tumbled again.
Watching kids play at Wicker Park on Wednesday, you'd never know there's worry, but their parents know.
"I see recovery, the question is when and how bad is it going to get?" said Chicagoan Eric Shaw.
DePaul University finance professor Rebel A. Cole predicted "We're going to see a lot of volatility in the coming weeks."
While a lot of financial experts have said that investors should not panic in the wake of the stock market roller coaster, Cole lived up to his name, Rebel, by saying he's already panicked himself.
"I'm a contrarian. I say get out of the way of the train," Cole said. "That light you see is not the end of the tunnel, it's a train coming at you."
After the debt ceiling debate debacle, Cole converted his portfolio to mostly cash and some precious metals.
To him, nothing really supported the past year's stock market gains.
"What is the explanation? 10,000 to 12,700 – 27 percent return; and unemployment stayed at nine percent, the housing prices actually went down," Cole said.
He said the housing market still has issues and there are potential bank problems on the horizon.
"When you see the funnel cloud coming at you, get into the storm cellar," Cole said. "If I lose 20 percent of my portfolio next month, if that materially affects my retirement prospects or the way I'm gonna live my life, then you need to rebalance your portfolio, reduce the risk."
His advice: don't be a financial bystander; know your portfolio and act according to your comfort level.
If you do bail out, you have to know when to get back in or you could lose big.
His take is very different from experts who said earlier in the week that investors should stay put and not panic.
The White Hosue says President Barack Obama met with both Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner Wednesday. But a Washington Post Poll found nearly 75 percent of Americans say they have no confidence the government can fix the economy.
