February 24, 2009

Andreas Rauterkus, Ph.D., is an assistant professor of finance at the University of Alabama at Birmingham (UAB). A native of Frankfurt, Germany, Rauterkus has earned finance degrees from universities in both Europe and the United States. His research, which has been funded by the FDIC among others, includes in-depth examinations of financial institutions with an emphasis on conflicts of interest situations in international banking. 

ON OBAMA'S CONGRESSIONAL ADDRESS

"This speech is crucial for the president and the markets, because as the economy has continued its downward spiral, Washington has been unable to speak in unified voice so far.

"Tonight, President Obama must speak with confidence and become the authoritative voice on economic policy. There can be no doomsday talk and his tone must be positive if the markets are to reverse course.

"It is also crucial for the Republican response to be civil and similarly positive, because divisiveness in Washington leads to confusion and fear in Wall Street, which drives markets down."

ON THE LOWEST MARKET CLOSE SINCE 1997

"I cannot recall anything like this in my lifetime. The U.S. markets have not seen these kinds of rapid and sustained losses across all industries in more than 70 years.

"In previous downturns there were massive single day sell-offs, Black Friday in the '80s for example, then the markets slowly worked their way back from there, but today we've lost 50 percent of the market in less than a year and it continues to decline."

ON WHAT STEPS INVESTORS SHOULD TAKE

"If you are in the market now, it is best to stay in and ride it out because selling at the low point is never advisable.

"Even though future declines are possible, much of the market decline is past us now. So investors should hold on because many company stocks are undervalued and when positive news begins to hit the markets again the recovery could be very rapid."