10/10/08 — Many uneasy, but waiting out Wall Street storm

View Archive

Many uneasy, but waiting out Wall Street storm

By Kenneth Fine & Matthew Whittle
Published in News on October 10, 2008 1:46 PM

This week's stunning decline on Wall Street has many local residents concerned about the future, even as financial advisors council against the panic selling that is driving the Dow Jones Industrial Average down.

"Emotions are driving this," said Carlyle Herring of Herring Financial Group in Mount Olive. "People are now selling good stocks that should not be sold because they're caught up in the moment. Greed is what created this problem, but fear is what is now driving this problem, and fear is always a bad indicator."

But people like Donnie Benson believe they have reason to be scared at this point.

"It just makes me ill," the 58-year-old said. "I'm not sure I'm ready to handle what might happen."

His story was different a few years ago.

"Everything was going great. I had put two kids through college, had my house paid for, thought I might retire early," he said. "Then, it's like the bottom fell out."

Benson now expects to work well into his 60s, as the balance in his retirement account has fallen with the stock market in recent days.

"For more security," he said. "So my kids won't have to pay for me to live out my time here."

And he is not alone in his fears.

John Lawson thought he was "doing the smart thing," when he set up a college fund for his daughter shortly after her birth 11 years ago.

But the account has lost 15 percent of its value this year, he said, enough to leave the father "really concerned" about how he would foot her college bills.

"I have faith in the economy long term," Lawson said. "But will the money be there when Haley is 18? I just don't know. And that's some scary stuff."

Herring, however, believes that in many cases, those college funds and those retirement accounts may not be in as much trouble as people fear -- especially in the long run.

In fact, he believes that now is the time to buy, not sell.

"To a certain extent it's already too late (to sell). There are going to be some tremendous buying opportunities coming up," he said. "It's impossible to predict when the bottom's going to be hit, but there is a bottom."

And he believes it's approaching, and that when it's reached, there will be only one way for the market to go -- back up.

"There are still good companies out there that are going to still be in business when this thing is over," he said. "I've got some clients, who are really amateurs, calling me saying 'I've got some money, where do I put it?' There are a lot of opportunities right now."

But, Herring also believes that people need to be smart about investing right now, and that for many, now may be the time to sit down with an advisor and come up with a real strategy for dealing with current and future revenues and expenditures.

"The first thing is the need to make sure your asset allocation (how you're spread over stock, bond and other accounts) is consistent with your situation in terms of age and financial resources," he said.

And for young investors that likely means a more aggressive strategy, while for older ones, those near retirement, it likely means they need to be more conservative.

"You need someone who can sit down as a third party, who can sit outside the emotional context and figure out how you can jerryrig your situation to make it work," Herring said.

He did admit, though, that this is the worst he's seen in his 23 years as a certified financial planner. But he rejected comparisons the Great Depression.

"There are some vague similarities, but there also are some big differences," he said.

Among those differences, he explained, are the actions of the federal government, which believes will help, and today's global economy. Also different, he said, is the fact that unemployment is much lower today than it was then and the fact that basic necessities, such as a food and shelter are easier to come by.

But that still doesn't change the fact that some people are struggling, like 47-year-old Joanne Baldwin.

"Why are prices so high for everything? Why is the market going down? Why did all these lenders fail?" she said. "All this is really becoming too much to handle.

"I thought I made a pretty decent salary, a lot more than some families in our poor neighborhoods. If I can barely pay my mortgage, what chance do they have?"

It's a question that Melanie Fuller is asking herself.

The 33-year-old single mother of three said making rent and buying "the necessities" is becoming more difficult every day.

"You have to put food on the table, you have to put a roof over your kids' heads," she said. "Other than that, I can't tell you the last time I had money to spend, on anything -- new clothes, a car wash, toys for my son."

Ms. Fuller has no money in the stock market, but relies heavily on credit for medical bills not covered in her health plan.

And now, monthly payments are on their way up, she said.

"Everyone is out there just trying to get by," she said. "I guess if we can make it through this crisis, we will all be better off for it, but right now, I'm a little worried."

Jim Thornton, too, is just trying to "hang on."

"That's all I can do until (the money) runs out." he said. "Then, I'll go to the welfare department."

Harold Anderson thinks it is a sign of much worse to come.

"Some preacher friends of mine who are up in age rolled their retirements into stocks and bonds, and now, they've lost it all," he said. "At their age, it's hard to go out there and dig a ditch. ... We're getting ripe for the end of the world."

Benson, though, "wouldn't go that far."

But he admits watching the news -- an activity that used to relax him -- now makes him "angry."

"Sure, I'm angry. I worked hard my whole life, never took a penny more than I was due," he said. "To have my livelihood on the line because of another man's greed, it makes me, I don't know, ticked."

And worried that the children he worked to provide for might have to provide for him.

"A man my age can't work forever. I guess I'll try to make it as long as I can," Benson said. "But let me tell you, if something were to happen where I couldn't work, with my retirement where it's at, that money won't last long."

-- News-Argus Staff Writer Bonnie Edwards contributed to this report.