Students and investors are counting their losses, as a drop in the stock market has caused many to re-evaluate their portfolios as their money evaporates.
“I’ve gotten destroyed by the stock market,” said sophomore David Ebrahemzadeh, who said he has invested since the age of 13. “I’m not losing money, but my profits have diminished.”
But even with the downturn of the Dow Jones average that dropped more than 300 points Tuesday and the NASDAQ, which reached a 29-month low Tuesday, Ebrahemzadeh said he will not give up on the market.
“I don’t look at this as being bad because I’m not casing out,” he said. “At my age this isn’t something that can kill me and sure I’m down in some of my stocks, but I feel they are good companies . I have time on my side.”
Another student, junior Rakesh Patel, said he started investing to save for the future.
“I didn’t think that I would win big, but I thought it was a good thing for the long term,” he said.
Patel said he invested money in the hard-hit telecommunications sector and as a result has lost most of his money in the past year.
“Everyone should know the risks. It’s a game and you need to be ready to lose money,” he said. “This will pass.”
Susan Hovanec, a certified financial planner and assistant vice president of investments at Ferris, Bakker, Watts in D.C. said that investors are now faced with the challenge of deciding what to do with their portfolios.
“What you need to do now is re-evaluate what you own and decide if these are companies you want to own three to five years from now . and whether it is a solid blue chip now that will stand the test of time,” Hovanec said. “Sometimes you need to take your losses and move on.”
Hovanec said younger college students are more susceptible to falling stock prices because they were most likely gambling on the high fliers, she said.
“Everybody wanted to get in on the more aggressive stocks,” she said. “Those are the stocks that have been beaten down.”
Because the prices of stock are so low, Hovanec said that now is the best time to buy at “big discounts.”
“People in the industry knew (the bull market) couldn’t last forever. The market was just bidding this up to unsustainable levels,” she said.
Another problem that investors faced, Hovanec said, center around those who bought stocks on margin. Investing on margin allows investors to use their stock portfolio as collateral for buying more stock. When stock prices fall, investors run the risk of a margin call, in which investors must make up for their loss.
But despite the stock downturn, prospects for success are still prevalent, particularly for entrepreneurs.
Dr. Charles Toftoy, director of GW’s entrepreneurship and small business program said interest in the program has increased. Toftoy said he has recently met with as many as two students a day who want to switch to an entrepreneurship major.
He said he sees success for entrepreneurs particularly among smaller companies, because larger companies have retooled by laying off employees, usually those that are the newest.
“The smaller companies are a lot better off. You can graduate from GW, go to a larger company and if you’re the last in, you’re the first out,” he said. “With the smaller companies there’s a little more camaraderie.”
The program, which has been in place since 1993, allows students to develop an individualized field of study plan.
But above all, students said they will not to give up hope.
“For me it’s not discouraging at all. A lot of people who are new they lose a little money and they don’t get back into it,” Ebrahemzadeh said. “Investing is a great way to make your money work for you.”