On Feb. 12, the Dow Jones Industrial Average on the New York Stock Exchange stood at 29,551 points. By last Friday, it had plunged to 21,636.

Though the DJIA is just one measure of the value of securities worldwide, it is one seen widely as a guide to performance of the markets in general. Losses on the scale of the DJIA — more than one-fourth of its value shed in six weeks — are the rule rather than the exception.

That has hurt tens of millions of Americans badly. With retirement savings invested heavily in stocks, many know they will have to stay at work for years longer than they had hoped. Some may be resigned to never retiring.

Matters have improved to some extent. The Dow has rebounded from a March 23 low of 18,591, largely on the strength of the $2.2 trillion CARES Act approved by Congress last week. Another factor in the improvement has been recognition that, though COVID-19 has affected corporations, most remain fundamentally solid.

Still, the market was overdue for what analysts call a “correction.” That term is used when holders of securities come to the realization that a bull market was based more on optimism than the real value of companies whose stocks are traded.

It is entirely possible that, even after the coronavirus scare has passed, stocks will not go back up to their pre-crisis level quickly. That would be a reflection of understanding that some stocks were overpriced before the outbreak struck.

The bottom line, then, is that many people with 401K savings and similar retirement accounts will take a substantial hit, from which it will take many months, perhaps years, to recover.

Still, investing in American business remains a good bet for the long term. COVID-19 has hurt the economy badly. But, because of the very working men and women who have lost investment money because of the epidemic, we will rebound.

It will take more than a microscopic bug to harm our economy permanently.

(3) comments

Conservative

Don't buy ANYTHING that has MADE IN CHINA label on it. Nothing. Let's make it a Nationwide effort to push that country to destruction for the biological war it is waging with the world.

libertyspirit

"Losses on the scale of the DJIA — more than one-fourth of its value shed in six weeks — are the rule rather than the exception." - you have it backwards. Losses on this scale are the exception, rather than the rule.

Jim McCarthy

Like a broken clock, the Tar is often wrong more than twice per day. The editors advise that investment in American business is a good bet. American business is the reason the market was doomed to a “correction.” At the same time, the editors ignore the fact of the tidal wave of job losses. Those folks won’t be investing for a long time. Rah, rah cheers to improve the economy are childish.

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