Doe Falls, but Don’t Despair
Doe fell . By and large. On Monday, it closed with a 1,100 pips drop, the largest single drop in history (of course, that makes sense given that it was at its highest level in history). At its lowest level on Monday, it has dropped nearly 1,600 points, and has lost about 2,200 points since the end of January.
According to the Wall Street Journal, this is because Wall Street fears higher inflation and higher interest rates due to rising wages. But while traders may have had a bad day, you can relax.
Do not panic
You may feel like you need to do something right now. Do not. Think long term instead. Are you in years from retirement? Relax then. The old editor always said that the best thing you can do on a day like today is not to check your 401 (k). (So please ignore this article that we posted earlier today. Or better yet, bookmark it at a later date. Thanks.)
More importantly, don’t turn on CNN or other reactionary media if it just annoys you. Yes, stay informed, but know that this is not the end of the world.
Stocks are risky. This is the name of the game. As USA Today reports,
Since 1900, there have been 125 corrections in the United States, an increase of 10% or more, which is roughly one correction per year. However, the market always moves – and eventually rises. Since 1980, the stock market has generated positive annualized returns for 28 of the past 37 years.
In some terms, the Dow Jones is down 4.6 percent today. On Black Monday October 1987, it dropped 22.61 percent.
The point of setting up a retirement account early in your career is that you have plenty of time to be successful and compensate for downturns. You really don’t lose money until you sell. This is why it is so important to have a diversified portfolio and why you should have a cash cushion.
Don’t blame Trump
Just as the Dow Jones’ record rise has nothing to do with the president, so does today’s loss. In any case, the Dow Jones Index as a whole is not a good indicator of our general position. As it is often said on the Marketplace, the market is not the economy .
It may be gratifying to note that Trump has repeatedly acknowledged record profits and therefore must take responsibility for taking the plunge, but that is not very helpful.
The stock market goes up and then corrects and has historically always bounced back up. So log off Twitter, unplug cable news, and enjoy the rest of your day.