In light of this week's roller coaster ride on Wall Street, the Daily Herald asked financial experts to answer consumers' questions about the stock market volatility and what it means.
Here are the experts we talked to:
- Michael Kabarec, partner at Kabarec Financial Advisors Ltd. in Palatine.
- Scott M. Krantz and Marc H. Pershan, managing members at Krantz, Pershan Associates in Northbrook.
- David L. Mead, Harris Bank investment officer.
- Jim Oberweis Jr., president of North Aurora-based Oberweis Brokerage, a small-cap, growth stock management company.
- James R. Platania, certified financial planner in Mount Prospect.
Q. On Monday the stock market crashed. Tuesday it bounced back. What's next?
Kabarec: "The market always overreacts on the downside and upside. It's the nature of the beast.
"People were out there looking for bargains and they found them. Tomorrow (Wednesday) I wouldn't be surprised if the market dropped 100 points. But I've already heard New Zealand opened up strong and so did Hong Kong. Overall, I think the market will start standing on its own more than it has the last two days."
Q. Is this a good time to invest in the stock market?
Platania: "If you're investing for at least five years, this is a good buying opportunity. And if you're hesitant, invest just a little bit now."
Q. Did the crash create any good buying opportunities and are they still available?
Pershan: "The answer is clearly 'yes.' The value of these companies didn't change overnight just because their stock was down 2 or 3 points."
Oberweis: "A lot of the companies are significantly lower than they were a week ago. Some of the ones we're looking at are Ciena, Intel, Microsoft. And Logan's Roadhouse - a steak seafood chain - the market just beat it down. It's a good buy."
Kabarec: "We have a laundry list of things that didn't get away from us. Coke is down, Intel was down substantially. Rubbermaid, Wendy's - many of these are still good buys."
Q. Should you change the balance of stocks to bonds in your 401(k) retirement plan?
Krantz: "A clear 'no.' As long as you can live through the market cycles a few years, equities are the way to go.
"If you're retiring in 18 months and you were going to rely solely on your 401(k) for your retirement benefits, I'd say you should have no more than 30 percent of your portfolio in the stock market. …