The Best of the Worst

Fortunately, this is not October 19, 1987 (Black Monday), when the Dow Jones Industrial average fell 508 points or nearly 23%. The nearly 400 point drop in the DJIA experienced today is only a 2.8% decline. It is important to keep the market fluctuations in perspective. Some of the headlines in 1987 could apply to today?

• "The borrowing has to stop. The market slide was a shot right between the eyes that had better wake us all up to simple fact that we can't keep romping forever on borrowed money." -Lee Iacocca, Chrysler Corp Chairman, October 20, 1987

• "The market is sending an unequivocal message to the President and the Congress to stop the political games and agree on a Federal deficit-reduction plan." -Representative Dan Rostenkowski, Democrat, October 20, 1987

• "I was scared this morning. I got wiped out on Monday. Tell your readers that you talked to a broker who is long three houses, and two of them are for sale. My boat is for sale, too." - A broker quoted in the New York Times, October 23, 1987
  

It is important to keep the type of market movements experienced today in perspective. A couple of my earlier posts might be of interest:

• Equity Market Declines: Keep in Perspective

• Psychological Bias: Keep in Perspective

Lastly, it was a good day to be anything but a financial stock. The Dow Jones U.S. financial sector declined nearly 3.5% and was the worst performing sector on the day. Following is the performance of several of the dividend focused exchange traded funds. Most of them have outperformed the major U.S. domestic indices over the last week. The ones that have not had higher exposures to the financial sector. For example, the ishare Dow Jones Select Dividend ETF (DVY), has almost 41% of its investments allocated to the financial sector.

(click on table for larger image)