Well, we knew it had to come eventually, right? We had to see a sharp downturn. Even though we knew it would happen, we are human, and thus it is in our nature to be concerned – even anxious. But, being we are all disciplined investors, let’s first examine what happened: The markets continued their October slide this week amid a general rise in Treasury yields and deepening U.S.-China trade tensions. The S&P 500 Index and Dow Jones Industrial Average each fell by just over 2%, and the tech-heavy NASDAQ lost about 1%. Yields on Treasuries did edge lower on Thursday, yet were still elevated after several days of gains. Also, the consumer price index rose just 0.1% in September; however, rate increases and concerns about inflation have contributed to the weaknesses in the markets as investors worry that higher borrowing costs and rising prices could affect corporate profits. Trade tensions continue between the U.S. and China (even though they have eased with Mexico and Canada) and fear of a trade war is beginning to take a toll on corporate sentiment and investor outlooks. So, that’s the why. Now, what do we do with this information? Well, the answer is quite simple: nothing. Movements like these are natural and healthy for the collective markets. This isn’t the start of a bear market – that happens very slowly, without sharp declines. While it is uncomfortable, we must be methodical and stick to our financial plans. It could still be rocky from now until the mid-term elections, but that is why we employ the time-tested techniques of diversification, rebalancing and dollar-cost-averaging. We are always here to talk, though, if you remain uncomfortable. Don’t hesitate to reach out! In the meantime, just enjoy the ride!
Market Conditions, October 2018
October 12, 2018