(NEWS CENTER Maine) — The economy has been doing so well, that most of us haven't been paying too much attention to the stock market. However, on Wednesday, the Dow plunged more than 800 points — its worst loss in eight months.
Stock prices fell far and fast and had people watching Wall Street closely, begging the question: What happened?
Jennifer Cook, senior VP of Norway Savings Asset Management Group, says "in many ways, the volatility happened because we had a bump in interest rates last week."
Cook says the Federal Reserve is raising interest rates in an effort to stimulate the economy. It's causing people to sell stocks and buy bonds. "Naturally people are gravitating towards instruments that can give them a higher rate today then it did a month ago".
The stock market is in it's largest period of uninterrupted gains in US history, but that can make many people nervous, anticipating a correction or a pullback.
Cook says the most important thing to do when the market plunges is NOT panic. She says "we tell our clients not to make a decision on an emotional basis. don't make a knee jerk decision"
In fact Cook says use this time as opportunity to check in with your investments. "Now's a really good time to look at your 401K allocations. See if your balances are out of whack, maybe you have too much risk so you might want to take this opportunity to re-balance some of those funds."
It's your money and the goal is to grow and protect it. Cook says "the important thing is make sure your diversified. Stick with your plan and really try to resist the urge to panic."
Not always easy to do when the market takes a nose dive....but remember saving for retirement is a long term strategy.