Stock market plunges in perspective

PHILADELPHIA — When the Dow Jones industrial average was in free fall this past Wednesday, I was at the University of Pennsylvania’s Wharton School listening to finance professor Jeremy Siegel talk about what went wrong in the last financial crisis.

Behind Siegel, on a split screen, were his lecture notes and real-time stock market data. Red numbers dominated the board for all the major indexes. And during the class, which I attended as part of a fellowship, the Dow plunged 500 points.

By day’s end, it had fallen nearly 832 points, or 3.15 percent. The S&P 500 and Nasdaq also saw significant drops, 3.29 percent and 4.08 percent, respectively.

“What do you think is going on?” I asked Siegel during class.

In his answer, he diverted our attention to historical trends in the stock market. He kept to his lecture points, unfazed by the market’s dramatic dip.

It was surreal listening to Siegel — a highly respected scholar on capital markets — deliver rapid-fire economic data like a restaurant server might speed through the nightly dinner specials.

My head was spinning as my heart was racing, knowing my retirement portfolios were experiencing thousands of dollars of losses — on paper at least. But Siegel was telling us to have faith in stocks based on how they have performed historically. Of course, past performance is no guarantee of future results.

Yes, there will be more market corrections, recessions and economic downturns. And people will lose money, especially if they act emotionally rather than rationally, Siegel said.

Yet, he wasn’t worried.

“I don’t think we are at the point where we have to panic,” he added.

Look at the numbers, he urged. The market’s historical patterns of ups and downs provide perspective that should calm nerves.

In his

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