February 27, 2007
The Dow Jones lost over 400 points but two local analysts say the news isn't that bad for investors.
"It was kind of a perfect storm of events that triggered this," said SNL Analyst Will Retzer.
The perfect storm Retzer is talking about began before the doors to Wall Street even opened this morning when the Chinese market dipped nearly 9 percent. Combine that with a slumping housing market, uncertainty surrounding the War in Iraq, and several weaker than expected economic indicators and you have a major sell off.
"You go so long without any downward moves and you get complacent. A day like today is very healthy because it reminds people that risk is a factor," said Ameriprise Financial Adviser David Barrett-Johnson.
All across the financial world, analysts say this downward spin is the market self regulating after several years of record gains. Despite watching the numbers drop quickly, even falling several hundred points in just minutes, analysts say it really wasn't that bad.
"Yes it was 400 points, but it was only three percent of the total Dow. As a percentage of a whole, it is not that large of a tumble," said Retzer.
"It's not the sort of thing that should cause anyone to panic. It is the sort of thing you should be prepared for if you are going to be in the stock market at all," said Barrett-Johnson.
And despite some talks of a recession, analysts say the safest move is probably to make none at all.
"The less educated investors, there may be a panic sell off or a switch to bonds but I think it is a little to early to tell," Retzer said.
Late this evening, the Dow Jones Company admitted that there was a glitch with the system that estimates the market numbers thus causing that sharp decline in a short amount of time. The New York Stock Exchange, the S and P and the Nasdaq all saw the same kind of drops but at a much slower rate.
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