Dow Takes a Deep Dive, But Many Investors Stay Calm

The Dow may have  dropped by more than 700 points Thursday, but phones at major retail brokerage firms in Manhattan were largely silent Friday morning.

Keith J. Gardner, a financial advisor at Ameritrade on Broadway on the Upper West Side, said that because most people now manage their portfolios from mobile or online, clients haven’t been calling in.

“People might be panicking, I don’t know,” Gardner said, adding that he was just a “technical advisor.” He was the only person in his office at 9:30 a.m., when the markets open.

The cause of the Dow’s drop — the fifth largest in history – has to do with recent trade tariffs that Trump has recently imposed on China, say observers. White House-led sanctions against China amount to over $50 billion worth of Chinese imports and three companies that lost by the most percentage points Thursday – Caterpillar, 3M, and Microsoft, have direct ties to the trading giant. Still others could be poised to lose big if China  decides to reciprocate, sparking fears of a trade war.  After a brief recovery Friday morning, the Dow took closed down 425 points, making this the worst week for the index in two years. The Standard & Poor’s  500 index  fell 6 percent for the week.

Fluctuations in the market are common – CNBC reported that there have been 80 drops of 300 points or more since 1987. Some wealth management firms argue that these market shocks are short-term, and won’t actually affect the long-term investments of their clients.

One even suggested that some older investors might even have themselves to blame.  A spokesman who declined to be identified for Charles Schwab, a full-service brokerage firm, said that some older people ‘get greedy’ when they’re closer to retirement and cash out of stocks, since fluctuations in the market are a greater risk in the short-term.

Other financial analysts said while the market might be stable in the long term, the ‘psychology of the market,’ can still wreak havoc in the short-term. He added that though not all stocks have to do with China, many “got hammered,” Friday because of perceptions.

“It’s very emotional. Psychology plays a very important role in the daily role of the market,” said Tasos Zambas, a New York- based financial consultant.  “People start losing faith in how the current administration is handling things, and that could be a problem.”