Market sell-off is a temporary fluke, Wall Street historian says

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Wall Street historian John Steele Gordon on Friday said the market sell-off was nothing compared to its past sell-offs and anticipates that it will be short-lived.

“This will be very short-lived, even in 1987 it went down 22% and it was back up in a year and a half, back up to its previous high. In 1929, it took 25 years to get back up to the old high,” he said.

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Stocks were hit by extreme volatility this week. Investors are concerned about rising inflation, which could result in the Federal Reserve raising interest rates faster than expected in 2018.

Though many investors and traders panicked during the recent market sell-off, the Dow has experienced much worse throughout its history. The largest Dow drop in history came in 1987, when it plunged 22.6%, and its second-biggest drop was in 1929 went it fell 12.8%.

The index’s worst day this year came on Monday, when it fell by 4.6%, which was its largest drop since August 2011.

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“The market will always sink with the underlying economy at some point. They can diverge for a while like they did in 1929, but if the economy is strong, the market is always going to be strong in the long-term. The economy is increasingly strong, people are starting to call it things like ‘robust.’ I think this [market sell-off] is a temporary fluke,” he told FOX Business’ David Asman on “After the Bell.”

Gordan said investors shouldn’t fear the current bear market and when possible should jump back in.

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