Stocks Plummet, But Don't Get Rattled

Posted by: Ben Steverman on September 4, 2008

The Dow Jones Industrial Average just closed down almost 350 points, and the Dow and S&P 500 both lost 3% today.

Panicking? There are plenty of reasons to worry, surely. But don’t overdo it.

Many predicted the stock market would get more volatile post-Labor Day, as more buyers and sellers returned to the market from summer breaks. Apparently they were right.

(Though some market experts also told me investors might seize the end of summer as a time to look ahead to a jump in 2009 earnings and start buying stocks. They’re wrong, so far at least.)

It’s true that recently the stock market has been acting very strangely. Though we journalists come up with reasons for what the stock market does day to day, fundamental factors can’t fully account for these wild swings.

However, this will pass.

Roger Nusbaum offers his words of wisdom:

In all likelihood you will quickly forget this bit of turmoil quickly enough. On April 12, 2003 iShares MSCI Emerging Market Fund (EEM) closed at $20.20, adjusted for splits. On May 17 [2003] it closed at $15.88. That works out to 21% in 36 calendar days. Does anyone remember what happened? I do not but how much fear do you think there was then? How many segments on TV or written commentary proclaiming the end of emerging markets do you think there were?

Take the hyperventilating on TV with a grain of salt.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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