What short-term market volatility means for your 401k

The video discusses a significant decline in the stock market, with the Dow dropping over 1000 points. Gregory Daco, EY's chief economist, explains that the market reaction is due to the Fed being behind in easing monetary policy, not an extreme economic weakness. He advises investors to maintain a long-term perspective on their 401K investments despite market volatility. The Fed's primary focus remains controlling inflation, and while it may ease monetary policy, it will do so cautiously to avoid reigniting inflation. The video concludes with advice on maintaining a balanced investment portfolio.

What was the primary reason for the recent market downturn according to Gregory Daco?

• An unexpected rise in inflation

• A significant drop in consumer spending

• The Federal Reserve's delay in easing monetary policy

• A sudden increase in unemployment rates

How should investors approach their 401(k) plans during market volatility?

• Invest heavily in international markets

• Maintain a long-term perspective

• Focus on short-term gains

• Withdraw all funds immediately

What is the Federal Reserve's primary objective in its monetary policy?

• Reducing government debt

• Increasing employment rates

• Controlling inflation

• Stimulating the stock market

What does Gregory Daco suggest about the Fed's future actions if the economy continues to slow?

• The Fed will stop intervening in the market

• The Fed will maintain current rates

• The Fed will cut rates at a faster pace

• The Fed will increase interest rates

What is the current concern for the Federal Reserve according to Gregory Daco?

• Reigniting inflation

• Rising government debt

• Decreasing stock market values

• Increasing unemployment

How does Gregory Daco describe the Fed's historical approach to interest rate changes?

• Quick and aggressive

• Slow and cautious

• Consistent and steady

• Unpredictable and erratic

What strategy does Gregory Daco recommend for managing investment portfolios?

• Avoiding all market investments

• Maintaining a balanced portfolio

• Focusing only on bonds

• Investing solely in the tech sector