Jim Loken heard fear in the voice of some of his clients on Monday as the Dow Jones Industrial Average suffered its single greatest daily loss by points.
He countered with a message of reassurance.
Although the Dow dropped a staggering 1,175 points to close at 24,345, easily eclipsing the previous record of 777 points on Sept. 29, 2008, Loken stressed that Monday’s showing was not “the symptom of a bad economy or a recession” and likely a combination of “testing of the fed chair” and “tantruming over interest rates going up.”
“It was a scary day for a lot of people, especially those who were wondering whether this was a start of something worse,” said Loken, a Santa Clarita-based wealth advisor for Thrivent Financial. “We have not had a day like this is a long time … (but) today is not something to worry about.”
Rather, Loken said, Monday would best be served as a wake-up call for investors who may have become too comfortable as the Dow surged to record heights. The market has been so strong, in fact, that Monday’s 4.62-percent setback paled in comparison to the record 22-percent loss during the 1987 crash and essentially negated the quickest 1,000-point boost in index history.
“This is a good time to check your portfolio with your risk tolerance and goals,” Loken said.
If Monday’s downer was too stressful on your stomach, he said, that’s a sign that you’re “probably too aggressively invested.”
Local heavyweights were marginally impacted by Monday’s shakeup, with Six Flags (SIX) slipping 2.39 percent to $64.62 and Carnival (CCL) dropping 2.73 percent to $68.04.
In all, U.S. stocks suffered across the board: The NASDAQ was down 3.78 points (273 points) and the S&P 500 lost 4 percent (113 points). The Dow was off, at one point, by some 1,600 points before a slight rebound in late trading.
Loken pointed to Jerome Powell’s first day as Federal Reserve chairman – Alan Greenspan and Ben Bernanke were greeted with similar market volatility on their first days in that position, he recalled – and ongoing speculation that the Fed in 2018 is expected to raise interest rates, potentially up to three times, as other possible factors for a messy Monday.
“I’m going to be watching tomorrow and the next day,” Loken said, but confidently added, “There’s no fundamental reason for us to see anything like we did in 2008.”