It’s Not as Bad as It Seems

The first week of February brought stock market volatility as the Dow Jones Industrial Average fell 1,175.23 points, or 4.6% on Monday, February 5th. This decline represents the largest point drop of a single day in history, occurring in the face of an increasingly strong economy. However, ranked by percentage, it’s only the 99th largest drop. Investors can typically expect market declines of 3-5% twice a year, but the market had been unusually calm last year. We hadn’t seen a correction since June 2016 and such a significant percentage correction since 2011. Market corrections are a natural part of the economic cycle and healthy in a typical bull market.

Market volatility can cause investor frustration, but it is essential to remain focused on long term goals. The fundamentals, earnings, and the economy, are growing in sync. With a growth spurt like this comes some needed volatility. The stock market has a reassuring history of recoveries, as market corrections have historically been temporary occurrences with the average correction lasting 17-calendar weeks. Remember, the goal is to maintain a long-term approach — not to beat the market one day or month at a time.

A market downturn may also present an opportunity to add to a portfolio. As prices fall to meet market corrections, stocks will move closer to relative earnings. We may consider now to be the right time to purchase highly attractive stocks at low prices with plans to hold onto them through future market growth.

Above all, time and a carefully diversified portfolio will reward investors who remain calm through periods of turbulence. As your financial advisors, we are here to talk you through it. If you wish to discuss the positioning of your portfolio and to ensure that your financial goals remain in focus, please do not hesitate to contact us at 315-637-5153.


Sue, Gayle and Katelyn, Registered Representatives

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