Dow Drops Record-Breaking Number of Points

On Thursday, Feb. 8, students opened their phones to find news notifications informing them that the Dow Jones Industrial Average had majorly dropped for the second time that week. According to CNN, the Dow plunged 1,033 points on Thursday, which was the second-worst point drop in history. It was second only to the point drop on Monday, Feb. 5, when the Dow plunged 1,175 ponts.

However, according to TIME, the Dow has been slowly recovering from this major drop. As of Monday, Feb. 12, the Dow Jones Industrial Average gained more than 400 points.

Professor of Economics Dina Franceschi defined the Dow as “an index of stocks and equities that track the movement of capital in and out of major firms.”

Professor of Economics Mark Leclair explained that this drop was foreseen by many and that it was simply a correction in response to the Dow steadily rising over the past year or so.

Leclair believes that the effects these drops will have on the University are negligible.

“The University has a very conservative portfolio, so harm to the University is minimal,” Leclair commented. Leclair also described the University’s portfolio as “diversified.”

“The University takes very good care of students’ money,” Leclair continued. “They’re very careful. They manage a very large endowment that goes into student aid and running University programs.”

Leclair, who has previously served on the University’s budget committee, further explained that the University does not get involved with high-risk stocks. He believes that the budget committee will have a conversation about the change in the stock market; however, that is the extent of the effect.

“The University has enjoyed a huge run up in stocks in recent years,” he said. “We’ll have to take out the expectations that the market will keep running up.”

Franceschi also commented on this topic.

“Fairfield University is an institution that looks beyond immediate or short-term responses,” Franceschi said. “We’ve seen a lot of strong, consistent growth in these indices in equity shares in the last year, in the last five years. The Dow was at its all-time highest. It had doubled in value in the last 10-15 years. The gains have been tremendous, so it wasn’t all that shocking to me.”

Leclair contrasted the recent dip in the Dow to the percentage drops that took place during the Great Recession between 2008 and 2009. The latter had an actual impact on the University.

The University was unable to raise tuition, had to let go of multiple employees and had to delay hiring and increasing salaries.

During the Great Recession, the percentage drops were much larger than the recent ones, due to the market being much larger now.

Associate Professor of Economics Philip Lane used an analogy to compare last week’s Dow point drops to the drops in 2008 and 2009.

“What happened last week was the equivalent of getting a dusting of snow versus the blizzard of ‘78 when the whole state of Connecticut was shut down for a week,” said Lane.

Lane expounded on some of the effects of the Great Recession.

“Faculty and staff got almost no pay raises for two years and a lot of capital projects were either postponed or cancelled,” said Lane. “The amount of financial aid the University was able to give was reduced and we had a challenge in terms of the number of students because tuition was rising and that also made it harder for students to come. So a lot of students in the pool actually postponed going to college.”

Leclair’s advice for investors during times when the market drops is to sit tight and not panic.

Franceschi agreed with this sentiment.

A non-reaction to all of this Wall Street excitement is probably the most appropriate reaction. “Don’t do anything hasty because of these corrections or crazy volatility at the present,” commented Franceschi. “You really have to look at a longer time horizon than just a week or a day or a month for these types of investment instruments.”

Business major Laura Mason ‘20 commented on why she believes that it is important for students to be knowledgeable about topics like this one.

“I think it’s important for students to be well-rounded and well-diverse when they work in the real world with other professionals,” said Mason. “I think it’s important to know everything that’s going on with the stock market and be knowledgeable about economics because then they can apply that to their jobs.”

Mason also pointed out the fact that students should care particularly about economic matters because, typically, they are concerned about paying tuition fees.

On Thursday, Feb. 8, students opened their phones to find news notifications informing them that the Dow Jones Industrial Average had majorly dropped for the second time that week. According to CNN, the Dow plunged 1,033 points on Thursday, which was the second-worst point drop in history. It was second only to the point drop on Monday, Feb. 5, when the Dow plunged 1,175 ponts.

However, according to TIME, the Dow has been slowly recovering from this major drop. As of Monday, Feb. 12, the Dow Jones Industrial Average gained more than 400 points.

Professor of Economics Dina Franceschi defined the Dow as “an index of stocks and equities that track the movement of capital in and out of major firms.”

Professor of Economics Mark Leclair explained that this drop was foreseen by many and that it was simply a correction in response to the Dow steadily rising over the past year or so.

Leclair believes that the effects these drops will have on the University are negligible.

“The University has a very conservative portfolio, so harm to the University is minimal,” Leclair commented. Leclair also described the University’s portfolio as “diversified.”

“The University takes very good care of students’ money,” Leclair continued. “They’re very careful. They manage a very large endowment that goes into student aid and running University programs.”

Leclair, who has previously served on the University’s budget committee, further explained that the University does not get involved with high-risk stocks. He believes that the budget committee will have a conversation about the change in the stock market; however, that is the extent of the effect.

“The University has enjoyed a huge run up in stocks in recent years,” he said. “We’ll have to take out the expectations that the market will keep running up.”

Franceschi also commented on this topic.

“Fairfield University is an institution that looks beyond immediate or short-term responses,” Franceschi said. “We’ve seen a lot of strong, consistent growth in these indices in equity shares in the last year, in the last five years. The Dow was at its all-time highest. It had doubled in value in the last 10-15 years. The gains have been tremendous, so it wasn’t all that shocking to me.”

Leclair contrasted the recent dip in the Dow to the percentage drops that took place during the Great Recession between 2008 and 2009. The latter had an actual impact on the University.

The University was unable to raise tuition, had to let go of multiple employees and had to delay hiring and increasing salaries.

During the Great Recession, the percentage drops were much larger than the recent ones, due to the market being much larger now.

Associate Professor of Economics Philip Lane used an analogy to compare last week’s Dow point drops to the drops in 2008 and 2009.

“What happened last week was the equivalent of getting a dusting of snow versus the blizzard of ‘78 when the whole state of Connecticut was shut down for a week,” said Lane.

Lane expounded on some of the effects of the Great Recession.

“Faculty and staff got almost no pay raises for two years and a lot of capital projects were either postponed or cancelled,” said Lane. “The amount of financial aid the University was able to give was reduced and we had a challenge in terms of the number of students because tuition was rising and that also made it harder for students to come. So a lot of students in the pool actually postponed going to college.”

Leclair’s advice for investors during times when the market drops is to sit tight and not panic.

Franceschi agreed with this sentiment.

A non-reaction to all of this Wall Street excitement is probably the most appropriate reaction. “Don’t do anything hasty because of these corrections or crazy volatility at the present,” commented Franceschi. “You really have to look at a longer time horizon than just a week or a day or a month for these types of investment instruments.”

Business major Laura Mason ‘20 commented on why she believes that it is important for students to be knowledgeable about topics like this one.

“I think it’s important for students to be well-rounded and well-diverse when they work in the real world with other professionals,” said Mason. “I think it’s important to know everything that’s going on with the stock market and be knowledgeable about economics because then they can apply that to their jobs.”

Mason also pointed out the fact that students should care particularly about economic matters because, typically, they are concerned about paying tuition fees.