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Anchored by Jake Tapper, The Lead airs at 4 p.m. ET on CNN.

Anchored by Jake Tapper, The Lead airs at 4 p.m. ET on CNN.

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June 20th, 2013
06:08 PM ET

Steps you should take when the markets plummet

Wall Street's worst day of 2013 was Thursday. The DOW took a swan dive, dropping 353 points, after already dropping more than 200 points Wednesday.

All this after Chairman of the Federal Reserve Ben Bernanke merely hinted that the government was going to taper off the stimulus money it pumps into the economy sometime in the near future.

"Every time the market thought that was going to stop, stocks started to sell-off," said CNN's Erin Burnett. "Stocks have really become addicted to this free money that Ben Bernanke has been pumping into the system."

For Americans who have investments, the market drop may spur some to action, which would be unwise, said Fortune Magazine's Andy Serwer.

"A lot of times people tell you to sit tight and it's very hard to do, but I really think this is a sit-tight moment," said Serwer.

"Interest rates are spiking right now ... Both the stock market and the bond market very overvalued, you could argue. Especially the bond market, interest rates [are] way too low, so speculators are blowing out of these markets right now. I would sit tight and watch that
happen," said Serwer.

Given that interest rates are spiking right now, one area where consumers should act, is in the housing market.

"This is a time where, for people at home if you have a mortgage and you're looking at buying a home, or able to do the refinancing, you want to seize the moment before interest rates start to move sharply higher," said Burnett.

Along with the markets, the price of gold also plummeted over the last two days, something Serwer said was bound to happen once the federal reserve began, or said it would begin, scaling back the money it has been pumping into the economy over the last five years.

"Gold, people were speculating that this was a safe harbor. Now that the U.S. economy perhaps is doing better, selling off gold, the dollar is rising,
there's all sorts of turmoil on the markets right now," said Serwer. "But of course the stock market and interest rates are the two big ones" for consumers.

Bottom line, consumers should not  react too quickly to the dismal days on Wall Street, said Burnett. Interest rates that the federal reserve control will not move until 2015. All the reserve has done, has come out and said things are getting a little bit better. As a result, markets are reacting sharply.

"To go and change your investment strategy based on that probably doesn't make sense. Although I would say, if you have been one of those people who has thrown all your money into bonds, it maybe time to think about that again and get some advice one whether you should change that," said Burnett.

"The bond market, long bonds, not a good place to be," Serwer emphasized. "The home market still probably has room to climb to the up side, I think."

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