Key Market Thoughts Given Recent Market Decline – This is a normal correction within equity markets. We just haven’t seen one for a while.
• The S&P 500 remains above November values (less than 3 months ago) – your portfolio value likely remains well above where it was one year ago. The chart below illustrates the S&P 500 price levels for the past one year. Chart sourced from yahoo finance.
• Monday ranks 99th in one day percentage drops in the Dow Jones Industrial Average, even though it ranks first in points dropped – as the value of the Dow climbs it takes larger point moves to create shocking changes in percentage value. The chart below is from the front page of the Wall Street Journal, February 6, 2018.
• A normal market decline is 10%, or more. These periodic declines are healthy. – Many market analysts and portfolio managers have been seeking a correction in the market. Markets typically move up and down as they more broadly move up with the economy. Think of a typical market as doing a yo-yo while walking up stairs.
• Volatility breeds opportunity – We will likely see continued volatility over the next few months as markets become more comfortable with the new head of the Federal Reserve, gauge inflationary pressures and review corporate earnings. As mentioned in the quarterly newsletter, inflation and rising interest rates may cause market unease in 2018. Price volatility creates greater opportunity to trade in and out of securities. We will be evaluating these opportunities.
There is never a bad time to invest. We are seeking financial security for the long term. Saving for the future means saving on a regular basis regardless of short term market movements.