Buzz
The Dow took a big hit, dropping 1,100 points on Monday—its largest single-day point loss ever (understandable, considering it was at its highest point in history). At its lowest on Monday, it was down nearly 1,600 points, and since the end of January, it has shed around 2,200 points.
This decline is fueled by Wall Street’s concerns that inflation is rising, pushing up wages and, in turn, leading to potential interest rate hikes, according to the Wall Street Journal. However, while traders had a rough day, there's no need for immediate concern.
Stay Calm
You might feel the urge to act right away, but resist. Think long-term. If retirement is years away, there's no rush. A former editor of mine always said that the best thing you can do on days like this is to avoid checking your 401(k). (So, kindly disregard this article we published earlier today. Or better yet, save it for later. Thanks.)
More importantly, avoid turning on CNN or other sensational outlets if it's just going to add to your stress. Stay informed, but remember, this isn't the end of the world.
Stocks are inherently risky. It’s simply part of the game. As USA Today notes,
Since 1900, the U.S. has experienced 125 corrections of 10% or more, roughly one per year. Yet the market continues to push forward — and rise. Since 1980, the stock market has posted positive annual returns in 28 of the past 37 years.
For perspective, the Dow dropped 4.6 percent today. On Black Monday in October 1987, it plummeted by 22.6 percent.
The reason for starting a retirement account early in your career is that you have plenty of time to build gains—and recover from market dips. You haven’t truly lost any money until you sell. That’s why it's vital to have a diversified portfolio and a cash cushion for security.
Don't Blame Trump
Just as the Dow's record highs aren't a direct result of the president's actions, today's loss isn't either. In fact, the Dow itself isn't even a reliable indicator of how we're really doing. As Marketplace often reminds us, the market is not the economy.
It might feel satisfying to say that Trump should be held accountable for the market's plunge, just as he often takes credit for its gains. But placing blame isn't particularly constructive.
