Feb 9, 2018 3 min read

A turbulent week on Wall Street roused memories of a scene from an outrageous and outrageously funny movie classic, “Animal House.”

Trying to fend of a stampeding mass of humanity, Faber College student Chip Diller, in ROTC uniform, implores the surging throng to “Remain calm! All is well!” Just before being flattened by the oncoming horde, a panicked Chip – portrayed by Kevin Bacon – shrieks, “All is well!” In his final moments, he is unable to remain calm.

That is sage advice that millions should have heeded over the past seven days, instead of running amok as the Dow Jones industrial average fell 500 points last Friday, then nosedived another 1,175 Monday. Concerns about inflation and higher interest rates caused stock prices to decline and stoked fears about corporate profits across the United States.

Then, following a slow start Tuesday, the market rallied – as some economists predicted. Numerous factors conspire to make the market a sensitive creature, including whims of investors based occasionally on rumor instead of fact. The stock market can be volatile, but over time, it tends to correct itself.

A short-lived plummet does not mean Chicken Little’s worst fears are materializing. The sky is not falling, and the economy is not tanking. In fact, many experts consider this to be a healthy economy.

That doesn’t mean all is well, but it does mean stay calm.

Associated Press, in the aftermath of that manic Monday, reported that the job market is better than it has been in more than a decade; that some economists believe the unemployment rate, at a 17-year low of 4.1 percent, could reach 3.5 percent this year, the lowest level in a half-century; and that many businesses, having trouble filling positions, are offering higher pay.

Consumer spending also is up, another encouraging occurrence. In the last quarter of 2017, it rose faster than it had in a year and a half. Businesses have been spending at an accelerated rate, too, indicating that they likewise believe the economy is improving. Companies bought more computers, machinery and other equipment over the last half of last year than they had over any six-month stretch since 2014.

One concern, according to AP, is that savings have fallen in U.S. households. The nation’s savings rate in December dropped to its lowest level since 2005, a circumstance that could devastate a family that would have to deal with an unexpected financial blow.

This has been a crazy week for the Dow, which on Tuesday appeared to be headed for a third consecutive plunge. The industrial average fell 567 points just after trading began. It rallied, however, and finished the day 567 points up, at 24,913. The market then fell slightly Wednesday.

Highs and lows – this is the mercurial nature of stocks. As long as the lows are not long-term, the market should not raise serious concerns. Remember Chip Diller’s signature phrase: Remain calm.