Market Update – Feb. 5, 2018

For those of you not watching the headlines today, US and global markets have dropped fast and significantly in a way that reminds us of 2008 and 2009 – but without any of the same general concerns.

As market moves of this magnitude can raise investor concerns (and emotions), we wanted to share a few thoughts. We, like you, are watching stocks move in ways that are clearly not tied to long-term rational decision making. We don’t see a “recession” around the corner or other broader data (manufacturing activity, unemployment, or GDP growth, etc.) that would suggest that today’s markets reflect the coming of a dim future. After 400 plus days without any real market correction of any kind, this could potentially just be a lot of pent-up trades feeding on each other.

It is of interest to us that one of the triggering events for Friday and today’s drop was actually the concern that economic strength may lead to the Federal Reserve having to raise rates more quickly because the economy and wage growth actually look better than they have for many years.

To be clear, we are not fearful about this pullback. It is likely needed and doing some actual good by moving speculators out and creating opportunities for investors like you/us. We do watch portfolios very closely and more so in times like this. Your Investment Policy Statement is always an important factor in making investment decisions. Effectively, it creates the action of “buying low” around the same time that the mass of news and activity is doing heavy selling.

As always, we are available as needed and look forward to talking with you soon. That said, please know that your portfolio is diversified and stewarded through this. We hope for less of a buying opportunity but these are precisely the environments (high volatility) that often create the best long-term opportunities to buy.