Wealth of Insight

What is up with the Stock Market? What to do from here:

If you are thinking that this selloff in the market was something you knew would happen, you are correct! This dip was inevitable as we have not had a 10% pullback in almost 2 years. Not that anyone was hoping for it, but on average the markets have one pullback of this magnitude a year. Just as a reference point, we have had only 4 in the last 9 years. Actually, the market has not even had a 3.5% decline in the past year. So, in our view, this pullback is long overdue. This is a healthy process as it generally runs many of the speculators out of the market and gives the long-term investor an opportunity to put cash to work.

A few things to reflect on as we work through this bout of volatility: the business cycle is still healthy, 2018 corporate earnings are projected to be the strongest they have been in history, banks are in great shape, unemployment is at a multi-generational low and wages are finally starting to move up. Although this may push inflation up from historic lows, in the long term, this is a positive. While everything is not perfect in the market or around the globe, I am optimistic we still have more to go in the profit cycle. I believe this market will now start trading on actual fundamentals and not emotion. A much healthier and positive state.

The key to surviving these markets rests on having your portfolios positioned correctly for your situation long before these corrections get here. Make sure your financial advisor completely understands your entire financial position and aspirations. All allocations are personal and there is no one size fits all. No one knows exactly when the markets will start heading back up but, in our view, it’s just a matter of time. It is always prudent to remember that it is not the timing of the market but the time in the market. Stay strong and don’t let a few days or even months of uncertainty lead you to make a decision that could affect you and yours for years. Remember, investing is the ultimate exercise in patience.

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