Gut Check in Rocky Markets

After the recent mid-week big down moves in the US and global stock markets AND if you are a long-time reader of TGIF 2 Minutes you are most likely expecting a “stay the course” message today.

The bottom line is: Stay the course. Technically you can stop reading here and go onto your Friday and weekend. How about that for a record 15 second edition??!

NYSE.JPG

Here is the remaining 1 minute and 45 second version:

Is there anything “different this time”? Not really. Most of the recent activity is part of “normal” market activity and upturn/downturn cycles over decades and decades dating back to the early 1900’s since data has been reported. There are a handful of factors that are slightly unique to the recent decade, namely near-zero interest rates (and negative interest rates in Europe) until earlier in 2018 in the US. But overall, big moves of 1-3%+ UP OR DOWN in the S&P 500 are part of what markets do over time.

The biggest factor is how an investor or saver – and the adviser – reacts to these biggest of market moves. Reactions are what determines where the investor will be in 3 months, 12 months, 3 years, 10 years… and beyond. Please talk to me about what your reactions are currently – because there may be adjustments to be made.

The factors at play currently in the markets:

  • Valuations of US and global stocks overall (which are high)
  • Valuations of a handful of technology stocks, some call them FAANG. Everyone knows the companies I am talking about.
  • Interest rates from the US Federal Reserve (which are going up)*
  • Interest Rates on bonds and CDs
  • The relationship of interest rates on bonds vs. dividends from stocks
  • The US Dollar amidst a US Fed tightening cycle
  • Oil prices and supplies
  • …and other factors.

This leaves plenty of subject matter for future editions of TGIF 2 Minutes. In the meantime, rely on asset allocation to do its job long-term and enjoy the peace of mind that can accompany that strategy.

*See last week’s edition, A Word on Inflation…with the picture of the Rocket Ship taking off.

 

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