USM economics professor weighs in on stock market

USM economics professor weighs in on stock market

HATTIESBURG, MS (WDAM) - Monday's stock market drop left some people in the Pine Belt wondering what will happen with their 401(k) retirement accounts.

Mehdi Barati, an assistant professor of economics at the University of Southern Mississippi, said the important thing is to not panic.

"It's too early to say anything because the market just crashed," Barati said. "It goes down, it goes up and it's too early to say anything about it or what will happen to 401(k).

"Don't get panicked, this is the first thing that they should do. These kind of things happen in the stock market. The thing that I saw a lot recently because of the economic in 2007 & 2008 crash and the financial crisis. We were doing good and people started buying stock and trying to invest their money, and I saw many people that are not like traditional people who invest their money because of technology and apps they started doing, going to stock market and buying and selling stock, they are not experienced people. Maybe they are getting panicked and this is the reason that is crashing now."

Barati said the markets were overpriced and he expected they might go down sooner or later. He said he wouldn't do anything in the stock markets right now.

"I think the main reason would be, as a lot of economist would say and we all agree upon, it's because of the interest rate is going up, because we see signs of inflation and this is the main reason. Especially because Janet Yellen, the former chair of the Fed, resigned.

"In the economy people react based on their expectations. This is what we are witnessing right now. People expecting the economy is going better, that's why they buy the stock. I don't think that it should've been up, the prices. It was a bubble. We expected that it should go down sooner or later."

He had some advice for people wondering if they should buy or sell in the stock market right now.

"If I wanted to buy and sell in the stock market at this time, I probably wouldn't do anything," Barati said. "The more that people get panicked, and the more people try to sell, the more that it will drop. The whole stock market, the financial system, everything is based on trust and if people lose their trust then it will crash."