Yesterday's stock trading extended what has been an exceptional stretch of volatility during the past three weeks, in which triple-digit drops in the Dow are becoming almost commonplace. During the past week, the blue chips fell more than 1,100 points, or nearly 11 percent.
"When you got a volatile market, it tends to stay volatile," said Georgetown's Angel.
Some investors will jump into the market thinking the bottom has been hit, and when stocks drop further, these investors will pull out in a panic, he said.
"The worst thing is to get caught up in the buy-sell mentality," he said.
Yesterday's paper losses at the day's lows came to $1.1 trillion, as measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies' stocks. That compares with a loss of about $1.5 trillion last week, the worst weekly return since the week after trading resumed following the Sept. 11, 2001, terrorist attacks.
As an indication of how fearful investors still are, government-backed debt was in high demand yesterday. The yield on the three-month Treasury bill, which moves in the opposite direction from its price, fell to 0.49 percent from late Friday at 0.50 percent. Investors are willing to accept low returns to have their money in a secure place.
Some Wall Street veterans even encouraged investors to wait on the sidelines for a while. CNBC's Jim Cramer said in an interview yesterday that investors should pull any money from the stock market that they may need within the next five years.
Not everyone agrees.
Barry Ritholtz, publisher of the blog The Big Picture, says Cramer's advice to bail out "smells like a giant buy signal."
The Associated Press contributed to this article.
