Dow Jones Crashes: Has it Finished

By Dale Gillham | Published 16 March 2020

Over the past few weeks you would be excused if you thought the stock market was behaving more like a yo-yo, given that two of the largest falls occurred on the Dow Jones last week since 1900 with the first occurring on 9 March and falling by 1,141 points while the other occurred on 11 March and fell by 1,051 points.

Since then we have experienced the biggest one day fall in history on the 16th of March with the Dow falling 3,069 points before rising at the end of the day closing the day down 2,997 points (-12.97%). The S&P 500 also fell 330 points before closing down 324 points (-11.98%).

Over the past few weeks we also experienced two of the largest gains that the Dow has had since 1900 with the first occurring on 13 March and rising by 1,211 points and the other on 2 March, rising by 1,112 points.

If you look at the history of the Dow Jones, you will find that there have only been three occasions where it has risen or fallen more than 1,000 points in a day, which coincidentally have all been in the last two years.

With the Dow Jones trading up around the all-time high recently, it is not surprising that its movements (in points) on a daily basis have been higher than it was ten years ago. However, the events in the market over the past two weeks have seen very abnormal, both up and down.

If we look at the 2020 calendar year, as at close of business on Friday 13 March, the Dow is down 18.76 percent. If we look at the constituents of the Dow Jones Index, we find that 14 of the stocks have performed better than the index itself including Microsoft which despite the bearishness of the market is up 0.72 percent for the year, Walmart which is down by around 3.99 percent, while Apple is only down 5.34 percent and Home Depot is down 5.82 percent.

At the other end of the scale we see that Boeing is the worst performer down 47.75 percent, which is understandable as many airlines will be struggling or in danger of collapsing with the current condition in the travel industry. Given this, orders for new planes will more than likely be delayed.

With the Russian and Saudi Oil war also hitting the market at the same time as the corona virus we see the big US oil companies such as Exxon Mobile is down 45.37 percent while Dow DuPont is down 42.21 percent and Caterpillar is down 32.53 percent.

Buffett famously states to be fearful when others are greedy and to be greedy when others are fearful. That said, right now I urge investors to be careful bottom picking in their attempts to be greedy and grab a bargain, as it could cost you dearly.

Any time the markets fall heavily, investors tend to jump into any slight movement up trying to grab a bargain only to find the stock falls further. It is far better to wait for the dust to settle than jump in too early and catch a falling knife. As we know, right now the market is volatile and while it will settle soon, now is not the time to panic or be greedy. 

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