After fifteen peaceful months of nearly uninterrupted advances, the market has finally begun to correct itself. Between the election and February 5th, the market experienced only four days with a decrease of more than 1%-- the same amount of such days in the last week alone. This was undoubtedly shocking for investors, who may have grown accustomed to little volatility. However, their fear has converted the market into a pendulum, swinging wide in both directions. By February 9th, the drop had breached -10%, officially entering into correction territory.
So, how far will it drop? Will it ever stabilize? What will happen next? The future is uncertain, but volatility is a feature of the stock market. Although it seems out of the ordinary, the contrary is in fact true. The long drought is over and has taken with it the sunny days of steady market growth. Now that the rain has returned, it is important to remember not to panic. The sun will not be gone forever, but the rain has returned and is likely to shower periodically.
If you would like to review the effects of the volatility on your portfolio, please contact our office to set up an appointment.
Important Information
The opinions expressed in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
Economic forecasts set forth may not develop as expected.
All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly.
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Investing involves major risks, including possible loss of principle. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.