Markets Panic – Should You?
- U.S. stocks are off to a rough start in the fourth quarter, with both the S&P 500 and the Dow Jones Industrial Average (Dow) erasing year-to-date gains through October 24. Meanwhile, the technology-heavy Nasdaq Composite index has finally entered correction territory (i.e., a drop of 10% from its recent peak). Markets are being hit from many sides in October – rising interest rates in the United States, uncertainty over an upcoming U.S. election, trade war fears, and various tensions impacting corporate earnings in the U.S.
- While a market sell-off never feels good, volatility remains the natural course of investing and requires investors to focus on the fundamentals. In fact, studies by Fidelity show that, since 1920, the S&P 500 has on average experienced a 5% pullback three times a year, a 10% correction once a year, and a 20% bear market decline every three years. In spite of these regular corrections, markets have still generated positive returns over the long run.
- While bull markets don’t last forever, declines are generally temporary as well. Investors who understand that and have a plan tailored to their specific financial goals will experience less panic when markets sell off and avoid making the emotional mistakes that often derail their portfolios.
The information contained in this presentation does not purport to be a complete description and is intended for informational purposes only. Any opinions are those of the content creator and not necessarily those of the named advisor(s), JWC or JWCA. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.