Market Volatility

Of course we’ve been watching the market volatility for the last several days.  As we write this on Monday we don’t know when a market bottom will occur, but we are fairly sanguine about what’s happening.  Our message: don’t worry, don’t panic and just hold the course.

We think it’s important to put things in perspective while the stock market gyrations are headlining on most news outlets.  It looks to us like this “correction” is long overdue.  While the stock market has been largely “range bound” for about the past year, we’ve actually been in a six year bull market since early 2009.  Many of us have forgotten that the market normally bounces up and down.  We think this current drop will be ultimately healthy for the market and in fact necessary for further upside opportunities.

There seems to be a consensus on what has triggered this recent concern reflected in the market:

• While interest rates should probably be 1.5 to 2%, the Federal Reserve has held rates down close to zero, fueling at least part of the bull market
•  The U.S. economy has been OK, but not great, for several years
• China’s economy is slowing
• This means sales by U.S. multinational companies (Apple, Exxon Mobil, Caterpillar) will fall
• China’s stock market collapse has reverberated around the globe, affecting markets everywhere

If we believe you should make changes we will of course let you know.  Should you want to discuss any of this please don’t hesitate to call.  In the meantime, we hope these words of comfort are helpful and you will stay the course.

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