What Should Small Investors Do?
After the Dow tumbled more than 500 points Monday, many investors are wondering what to do, as Wall Street braces for what Tuesday might bring.
CBS 'This Morning' Contributors Daria and Ken Dolan present their views on the stock market against those of Tom and David Gardner, brothers and co-founders of The Motley Fool online investors magazine,.
"It's absolutely a question of who you ask," Daria says. "Obviously, we are going to hear more good news from people on Wall Street who have a vested interest in keeping the public from bailing out of this market. But I think that we have more troubles to come."
The Dolans suggest that individual investors get out while they can, especially if they are nearing retirement. While the Dolans encourage people to look at the stock market for long-term value, they believe that the current trend is too risky for small market players.
"There's a time to fight, and a time not to fight," Ken says.
 Tom and David Gardner |
The Gardners, however, predict that the market will recover.
"This is very bad for the short-term investor, but if you're in the market for the long term, you will be safe," Tom Gardner says.
He says that, because this year has been a bull market, many new investors came in with high expectations. However, while many tend to panic, he notes that people who rode through the terror of Black Monday in 1987 "are very rich today."
"What you have to look at are the big businesses. Those are doing well," Tom says. "If anything, now is the time to buy stocks. There has been a big decline in recent weeks, but it will rebound."
The Dolans disagree.
"Let me tell you, Mr. Motley Fools and everybody else, the long term is the easiest way o talk about the market. Yes, if the market continues down, you take seven, eight, nine years to get the value back in your retirement plan," says Ken Dolan.
The Dolans suggest that investors put their profits into money market funds, and that they stay "on the sidelines, and wait for a better day."
Tom Gardner suggests that the common investor keep only long-term savings in the market and invest in the Standard & Poor's 500 index fund. He says that people can still invest, if they pick big companies whose products they have to use, such as Heinz, Gillette, and Coca Cola.
While both sets of analysts differ on how to handle investments, investors around the world continue to watch whether the global markets can rebound from Monday's fall.