CHARLES CITY, Iowa - To say the effects of COVID-19 are being felt on Wall Street would be an understatement. Instead of soothing the markets, another emergency interest rate cut from the Federal Reserve had the opposite effect.
The Dow plunged more than 2,200 points at opening and trading halted for 15 minutes, and would end up dropping nearly 3,000 points at the end of the trading day, the worst one-day point drop in history.
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Investment advisor David Jarvill has been astounded by the recent turbulence in the markets.
"The volatility that has been in the system has been just phenomenal over the last 8 days. We don't see moves like this on a regular basis. The fear index [VIX] right now is trading at 76. Historically, volatility kicks in the market at 18-20. We've been asleep at the wheel with VIX because it's been trading 12 or 13."
Jarvill believes there is a key difference between the dramatic 2008 drop in the Dow, and what we're seeing now.
"The infrastructure of the banking system was in danger, which made our whole system in danger at that point. This is a healthcare crisis that is turning into a financial crisis. At that point, it's completely different. It's a panic. At that point, panics need to be dealt with in different ways."
There were a number of so called circuit breakers put in place after Black Monday in 1987 to stop panic selling.
"Most trading's done electronically. At that point, you don't need to necessarily have a group of people gathered at any one place to trade stocks."
Jarvill encourages investors to remain calm.
"If you have a long term time horizon, and your goals are a little ways off, at that point, it doesn't make a lot of sense to be a seller. If you need money, and you're forced to sell, then at that point I think it's a good idea to look at the bond side of the ledger."
The NASDAQ also ended the trading day down about 12%.
