The U.S. stock market today showed how nervous and fragile it is as riots in Egypt triggered a sell-off of 166 points (1.4%) on the Dow, 23 points (1.8%) on the S&P 500, and a breath-taking 2.5% (68 points) on the NASDAQ.
That’s the story the press is going with, at least. I follow all three indexes and how they compare to where they were in the year 2000 (the day of week and dates conveniently match up), and I noticed an even bigger sell-off occurred on the same day 11 years ago. Let’s look at the DJIA numbers:
DJIA close on Thursday, January 27th, 2000: 11,028
DJIA close on Friday, January 28th, 2000: 10,739
Total sell-off: 289 points (2.6%)
I saw the same pattern from 1999 through the present except for 2001 and a two-year break from 2005-2006. In the waning trading days of January there was a regular triple-digit sell off. Details:
DJIA close on Tuesday, January 26th, 1999: 9,324
DJIA close on Wednesday, January 27th, 1999: 9,200
Total sell-off: 124 points (1.3%)
DJIA close on Thursday, January 27th, 2000: 11,028
DJIA close on Friday, January 28th, 2000: 10,739
Total sell-off: 289 points (2.6%)
DJIA close on Monday, January 28th, 2002: 9,865
DJIA close on Tuesday, January 29th, 2002: 9,618
Total sell-off: 247 points (2.5%)
DJIA close on Wednesday, January 29th, 2003: 8,110
DJIA close on Thursday, January 30th, 2003: 7,945
Total sell-off: 165 points (2.0%)
DJIA close on Tuesday, January 27th, 2004: 10,609
DJIA close on Wednesday, January 28th, 2004: 10,46
Total sell-off: 141 points (1.3%)
DJIA close on Wednesday, January 24th, 2007: 12,621
DJIA close on Thursday, January 25th, 2007: 12,502
Total sell-off: 119 points (0.9%)
DJIA close on Thursday, January 24th, 2008: 12,378
DJIA close on Friday, January 25th, 2008: 12,207
Total sell-off: 171 points (1.4%)
DJIA close on Wednesday, January 28th, 2009: 8,375
DJIA close on Thursday, January 29th, 2009: 8,149
DJIA close on Friday, January 30th, 2009: 8,000
Total sell-off: 375 points (4.5%)
DJIA close on Wednesday, January 27th, 2010: 10,236
DJIA close on Thursday, January 28th, 2010: 10,120
Total sell-off: 116 points (1.1%)
2009 was obviously even worse with two double-digit hammers in a row.
All of the above data reinforces what I already knew – people like to retrofit causation where it isn’t really warranted because it makes for a better sound bite and for more peace of mind. “Escalating protests in Egypt” did not “jar world financial markets” as the AP claims. It is both far more complex and far more simple than that at the same time. Financial markets were jarred from falling by greater than 1% in a single day. It happens. Almost on schedule.
When you have a strategy that isn’t subject to the daily fluctuation of the market, and, in fact, benefits from increased volatility, you have true peace of mind and don’t have to care who or what the press chooses to blame for the most recent triple-digit downturn. If you don’t currently have that peace of mind, contact Devers Financial Group today to learn more and join our growing list of clients. Once you have, the press can blame it on Mrs. O’Leary’s cow for all you’ll care.
