Our Thoughts on Current Stock Market Swings
Ouch! We have seen a rough start in the month of October with global stock markets. As I write this post the Dow Jones is down about 9.5%, S&P 500 down about 11% and international stocks are down about 11% from their peaks in late September. The questions many investors are asking are, "What should I do?" and "Should I be worried?" The answers are "Nothing" and "No".
In our 3rd Quarter Newsletter we addressed the strong 3rd quarter performance and the likelihood of a tough start to the 4th Quarter. We believe the markets are in a normal correction (10% drop from recent peak). This happens on average about once per year. A pull-back (5% drop from recent peak) happens about 3 times per year on average. The markets are likely correcting right now for multiple reasons:
- Profit taking from active traders.
- Concerns that interest rates may rise too much and too quickly.
- Trade wars.
- Midterm elections.
We believe the current correction is normal and would not be surprised to see a strong finish to the year. There will likely continue to be major daily swings as we lead up to the midterm elections. We will also likely see significant volatility the days after the elections as markets reposition based on future expectations. In periods of increased volatility like this, the best thing to do is to relax and not let emotions or fear drive any of your investment decisions. We were contacted by Fox 31 News for our thoughts on the recents swings in the market. To read the article and watch the video, please CLICK HERE.
Please contact us with any questions. Enjoy the holiday season!
Scott Arnold, CFP®, has been in the financial services industry since 1998. He is a co-founder of IMPACTfolio, a wealth management firm that specializes in IMPACT investing and holistic financial planning for one flat-fee.
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