Dow Jones sees largest single-day drop, financial expert emphasizes context

SALT LAKE CITY – As the Dow Jones Industrial average saw its biggest single-day drop Monday, Feb. 5, a financial expert in Salt Lake City said the best course of action is to stay calm.

The Dow Jones Industrial closed Monday afternoon down 1,175 points. It had been down as much as 1,500 through the day — the largest single-day point drop ever.

“No one really saw the downside and the volatility that we’ve seen in the market for the last week coming, after what was probably the quietest year in market history in terms of volatility in 2017,” said Jason Ware, Albion Financial’s chief investment officer.

Ware said it was important to see the drop in its proper context. While it set a new record for a single-day drop in points, it was only about 4 percent of the total market. Ware said the slide began on Friday. The market briefly rebounded Monday, then started sliding again.

When it dropped to its 50-day average, Ware said, that was a trigger for automated selling.

“Pushes it lower, people get scared, panic sets in, pushes it lower, so you just start to feed on itself,” Ware said.

Ware said long-term investors should stay calm about Monday’s drop.

“Investing is an emotional experience. It can be fearful. It can be exciting. It can be confusing, all of the above. Making decisions under the cloud of those emotions is typically where investors make mistakes,” he said.

While Monday’s drop was notable, Ware said that kind of volatility was far more typical for the market than the stable rise it saw over 2017. He believes the pullback will be brief.

“Our view is that it’s likely to continue on an up trend for the time being, that these dips will ultimately be bought,” Ware said.