Skip To Content

Dow Closes Down in Biggest Single Day Point Loss Ever

Matthew D. Savery, CFA, CFP®

Dow Closes Down in Biggest Single Day Point Loss Ever

Don’t you just love the headlines you find in the financial news? The title of this piece came from a headline we found on February 5th after the markets were down significantly for the day. There is no doubt that financial headlines are meant to instill fear and confusion into the minds of investors. Here at M. Griffith, we find them nothing more than amusing.

There is no doubt that the markets are currently going through some turbulence. This turbulence is a welcomed trait in that maybe we are returning to more normal markets. Over the past few years, the markets – and our portfolios – have done nothing but go up. THIS is not normal. Volatility and market swings are completely par for the investing course. This recent downturn in the market should not deter anyone from investing, or making any radical changes to their investment plan.

The last time we saw a market pullback of over 10% (some call this a market “correction”) was back in 2016. The worst pullback in 2017 was just 3%. Consider that since 1980, the average intra-year decline in the S&P 500 Index was just about 14%. From the high of this year to the low of closing on February 5th (when this headline appeared in the news), the S&P 500 Index dropped less than 8%. Still far from a “normal” drop in the market. For further perspective, in 2018 thus far, the S&P 500 Index is down about 1% in total. What we have experienced in the past few days is completely normal market activity. There is no need to fear the headlines.

Consider next another tidbit of information. From 1927-2016, The S&P 500 Index was down 5% or worse about 50% of the time. More astonishing is that over the last 90 years or so, the S&P 500 has been in a bear market (down 20%+) almost one-quarter of the time! Yet if you pull up a chart of the index, you’ll see a steady upward trending line! The point is that the markets give us plenty of opportunities to be in a state of regret when investing in stocks. The past few days have given us one of those opportunities. The trend is upward, but stocks don’t go up every day, week, month or year. There is no need to fear the headlines.    

Our favorite analogy that we recently heard was that the past few days have been like heartburn, rather than a heart attack for the market. The economic and financial fundamentals remain strong and we believe this turbulence will soon pass. It may not be comfortable at times, but it seems reasonable to expect that stocks will move higher over the coming year and into the future. There is no need to fear the headlines.

If you have any questions, please contact your M. Griffith adviser.