After a 350 point dive on the Dow Jones industrial average, Thursday marked the worst day of the year for Wall Street.
At the source of the slump - experts say - Fed Chief, Ben Bernanke announcing billions of dollars in cut-backs on federal spending, which could be partly to blame. Now that the job and housing markets are consistently improving, Bernanke is essentially removing the 'safety net' from the economy. That is leading to rising mortgage and interest rates, and investors pulling out.
"They often panic and they sell their stocks because the stocks represent a picture -- a claim on the profitability of the economy and with interest rates going up, those claims will be less valuable," said Tulsa investment manager, Fredric Russell.
But how does it all affect you? Your 401K could take a hit, but experts say, each situation is different and it is important to ride out the highs and lows of the market. Russell says, it is a risk you take when investing in the stock market.
"A lot of people didn't examine their assumptions when they went into the market. They didn't want to face the fact that there would be days like yesterday and that's part of the game. There's no way to avoid it," Russell said.
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