Stocks are settling after the market closed on October 15 with the greatest four-day increase in nearly 70 years. The last such rally occurred on April 22, 1933. But even with these gains, the market remains low as it struggles to climb out of its depressed state. In this bear market climate, both exuberance and panic are to be expected.
"Those four days were irrational," says Donald Moine, Ph.D., who specializes in business and investment. "The market went up more than it should have gone up. Now we are having a healthy correction." Stock prices have since returned to more stable levels as investors work to regain confidence in the market. Large and fluctuating gains and losses such as these are signs of an economy that is bottoming out.
"The volatility will continue, so people should not be scared by it," says Moine. "We should expect the volatility. It is a natural process." Moine advises investors to avoid focusing on the short-term fluctuations occurring now, because even the experts are having trouble reading the over-reactive market. He remains confident in the long-term health of the economy.
