Creighton Economist Ernie Goss. (file photo)

After months of stock market surges, the past several days have seen tremendous declines, with the worst-ever single-day drop of the Dow Jones Industrial Average.

Iowans are seeing their 401Ks and investment portfolios take significant hits, then slowly rebound, only to fall again. Creighton University economist Ernie Goss says more rollercoaster rides are likely.

“The volatility index has doubled over the last few weeks so it’s not a time for those who are faint of heart,” Goss says. “It’s all about interest rates, it’s all about inflation and it’s global, it’s not just the U.S., we’re seeing it across the globe right now.” Such investments are typically for the long-term and Goss says people need to think things through carefully before reacting. Let it ride, he says, unless you’re planning to retire soon.

“It depends on your outlook,” Goss says. “If you’re looking at the next six-to-ten months or next year, then maybe you need to move into cash. If you’re long-term, three to four to five to ten years, don’t panic. We’re going to see a return to good fundamentals.” Market “corrections” are normal, Goss says, and don’t be surprised to see the markets bounce.

“We need to see interest rates or at least the outlook in terms of inflation quell down,” Goss says. “We went from a world concerned about deflation to now inflation. It’s a big change of the last several months.” The Dow dropped a record 1,175 points on Monday, primarily due to fears about the bond market.

(Thanks to Karla James)