DOW Falls, Loses Almost 5% Of Value

Stock markets in the US took a sharp downward plunge.

The Dow Jones ended the day 1175 points lower than where it started losing nearly 5% of its value.

Christopher Harvey - Head of Equity Strategy at Wells Fargo Secutiries - tells Business News Network this was not unexpected.

He says a change of leadership at the US Federal Reserve Bank is part of the reason.

Harvey says the markets have been very calm for about 2 years.

"Now we're starting to get volatility, what we say if this is the old normal, this is the way things used to be and now we just have to get used to it or acclimate ourselves to this kind of environment moving forward"

He says what has been a very steady situation is changing and that has investors moving to safer ground.

"Now the equity market is starting to unwind, it's starting to become unglued." explains Harvey  "Usually whe we see the VIC shoot up, usually when we see equity markets fall back what we see is people run to risk aversion and part of that is running to treasuries and starting to bid up some of these treasuries"

Harvey says investors should not get out of the equity markets.

"What we see is there's lots of good reason to buy the market what we've told our clients and we expected last week, we expected the equity market to sell off but what we've told our clients is this is a walk not run type of situation because we haven't had volatility at this level for a long time we've had really calm markets "

Harvey says their recommendation is for people to put about 1/3 of their cash reserves into the stock market.