Unstable market proves costly

by Taylor Kingsbury
Staff Writer

Today's stock market climate can be an imposing entity for new investors. Students looking to build their portfolio will have to contend with unpredictable fluctuations in a market that can change drastically overnight.

Is this a good time for student investors to step into the market?

Associate professor of finance Abe Helou thinks the current market may not be the best starting point.

"If you are a new investor, you usually don't have the stomach to lose money," Helou said. "To jump into a stock that someone says is going to be good is very scary at this point."

On the other hand, economics professor, Ahmed Ispahani, said that now may actually be an ideal time for new investors due to low prices throughout the market.

"Long term, this is a very good time to buy," Ispahani said. "America is a strong economic nation, and the long term looks good."

Helou said that the market is in "a state of influx," and undereducated investors are overreacting to these fluctuations.

"Whenever investors do not have complete information, they tend to react more strongly to the positive news," Helou said.

Business professor Jace Baker also emphasized the importance of research before investment, and recommended that students carefully examine the companies they will be investing in. He added that there are excellent resources for students online.

"Online brokerage firms have a phenomenal amount of information for free, even if you don't have an account with them," Baker said. "Look for companies that are financially solid, and have a good concept. If a company is making toothpaste for dogs, that's probably not a good investment."

Helou said that brokerage firms are the best way for new investors to begin building their portfolio.

"For any amount, you can find a portfolio to fit your needs," Helou said. "Look for mutual funds that have an investment strategy that fits your portfolio objective."

For those who want to navigate what Helou called the "rough sea of investment," the professor said potential investors should plan their path very carefully.

"Decide what you want in your portfolio," Helou said. "Then see what is available. Decide on your strategy. Are you going to be an active or passive investor? Ask yourself, 'how much risk am I willing to take?'"

"Short term, the market's had 14 cups of coffee, and it's all over the place," Baker said. "But historically, the market performs well, and historically, a lot of smart things happen."

Still, Helou adds one crucial piece of advice for new investors: "Buy some ulcer medication."