SACRAMENTO (CBS13) — The DOW took its biggest point drop in history in 12 years due to concerns over the coronavirus on Monday. That has investors worried, but financial planners say now is not the time for a knee jerk reaction.
It was a blood bath on Wall Street Monday. The DOW was literally in the red, down more than 2,000 points. That means if you have a 401(k) investments, you saw their value plummet some by as much as 20%.
“It’s just bad, it’s just bad,” Joe Martinez said.
Martinez has been checking his stock portfolio all day.
“I think we lost more than I’m even willing to consider right now. It’s insane,” Martinez said.
The DOW dropped 2,000 points over coronavirus fears, the worst day for trading since the global financial crisis of 2008.
“Every time one of these happens it’s few and far between, but it’s stark and it rattles people,” Financial planner Grant Bledsoe said.
The drop was so extreme it triggered the first automatic halt in trading in more than two years. It is what’s called a circuit breaker.
“If it falls more than seven percent, you have to take a 15 minute time out. If it falls more than 20 percent, then stocks are closed for the rest of the day,” said Bledsoe.
Bledsoe says the stock market was poised for something like this.
“I think what we’re seeing today is the bills coming due for the last 8-10 years of consistently positive returns. We’ve kinda been spoiled with the bottoms of the mortgage crisis,” said Bledsoe.
This comes as Italy began enforcing a lockdown for a quarter of the population to protect against the spread of the COVID-19 and began enforcing travel restrictions. This is one of several reasons Ramone Qutami predicted the crash.
“Because of the way the United States is handling the crisis, they did not take the right steps. And that, in my opinion, affected the global economy,” said Qutami.
The feds say they are monitoring the situation.
United States Secretary of the Treasury Steven Mnuchin said in a press conference Monday, “Whatever support we need to provide to the U.S. economy, we will use all our tools, working very closely with the regulators, the president has the bank CEOs coming in this week.”
One retired couple is watching and waiting. They say they’re a little nervous, but not taking any action yet.
“Of course you always get nervous when you lose money,” said Paul Jackson.
Experts say that’s the right thing to do whether you’re ready for retirement or already there
“The path to the best outcome is a long-term consistent strategy that doesn’t change based on today’s or last week’s news,” said Bledsoe.
Bledsoe says don’t touch your 401(k) and suggests selling off stock to take a loss right now if you want to for tax purposes.
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