LANSING, MI (WLNS) – The stock market took a brutal hit Friday afternoon, the fourth consecutive day of plunges.
Experts say we’ll see a 10 to 15 percent drop in the markets in August, September and October of this year.
There is some good news to all of this.
Ted Feight, who is a financial expert for Creative Financial Design, says while the stock market took a tumble, it’s a trend he says is normal this time of year.
Feight weighed in on what this means for people who invest in stocks and how it could affect those who don’t.
“We’re in the third year of a presidential cycle,” Feight said. “What happens at this exact time is that the market gets very confused because you have so many people running for president.”
If you take a look at the dramatic loss we saw Friday, the DOW closed down 531 points; the NASDAQ also saw a drop of more than 170 points, and the last time we saw numbers like these was four years ago.
“2011 we got down 20 percent in all three markets and it came back,” Feight said. “Actually we’ve made a lot of money since then.”
History shows there is a light at the end of the tunnel, Feight says according to the Stock Market Almanac, sometime in October those numbers will start to pick up and historically, we should see a 30 to 50 percent gain between the end of October and the election in 2016.
“September is the worst month of the year in the stock market historically.. August is close behind,” he said.
Feight says whether you invest in stocks or not, with the stock market down people tend to spend less.
“Stores will not do well in the next couple of months other than the back to school because people don’t feel like they’ve got money to spend,” he said.
He says the real problem will come in 2017 or 2018, since we’ve gone at least 10 years without a recession.
“And the last recession was in 2008, so that means at some point we’re going to have a recession,” Feight said. “Usually our indicators have always given us a 12 month warning.”
But for now, he says this plunge is nothing to be worried about.
“The world’s not ending.. It’s probably a 90 day at the most problem and everything’s going to get better,” he said. “Don’t worry about making any major changes right now, when you make changes in a period of time like this.. They’re usually wrong.”
Another factor Feight weighed in on is oil prices. They dropped below $40 a barrel.
He says most people tend to think falling oil prices are a negative thing and while the drop can be bad for oil stock companies, he says it’s a good thing for consumers, because it puts more money in their pockets.