The markets are once again doing what markets do.  Volatility is back in the headline news.  Let’s take a moment and look back at what’s happened in 2018.  The DOW opened at 24,809 on January 2nd and climbed to 26,616 by January 26th, an astonishing 7.5% gain in a mere 19 trading days.

Monday was the worst day that the DOW has ever had in terms of POINTS.  Is this perhaps market hype?  The DOW was down 4.6%.  Don’t get me wrong; this is a very large one-day loss, but NOT the historic plunge the media is making this out to be.  In percentage terms, we have seen many days like the one we saw on Monday.

I can certainly understand that for many, it is difficult to hear the negative news and not be concerned.  I hope some historical perspective might be helpful.

First, we know that stocks usually go up!  However, they certainly also come down — and perhaps more often than you might think.

  1.  Only once in the last 89 years has the S&P 500 NOT dropped at least 4.4% from an INTERIM peak.  In 2016, there were FOUR of these interim downturns.  Nevertheless, in 2016, the S&P 500 rose 9.5%.
  2. Three-Quarters of the time, these intra-year downturns were 10% or more and the average was 17%.  I am sure we can all remember those brutal stock market moves we saw both during the BREXIT vote and the US election.

So, what is a prudent investor to do during periods of significant market volatility?  Please remember that:

  1.  Downturns are to be expected, and your portfolio was designed and is being managed with volatility in mind.
  2. Volatility is the friend of the long-term prudent investor because real market returns come from market volatility.

If you have any questions or concerns, please contact me.  I am available to speak with you on the phone or meet in person.  My goal is to help you achieve financial peace of mind.

By the way, as I type this post, the S&P is up 290 points.