Submitted by Prosperity Financial Group on February 7th, 2018
stock market, volatility, 2018
Recently there has been a spate of stock market volatility. We thought we’d share a few points regarding this past week that you might find relevant.
Stocks had a broad “correction” where the market dropped by almost 10% over about a week.
Why did it occur?
It had a wide variety of factors - including some factors that might be counter-intuitive, like better than expected unemployment numbers.1 Another factor that made it so sudden was the impact of computer-driven trades that are run by a large number of hedge funds. But ultimately, sometimes the market just goes through periods of volatility.
Is the volatility over?
In the short term, it seems to have abated - of course that does not mean we won’t see more swings again this year.
Is this normal?
Yes. In any given year, it is normal for the market to drop 5%-10%; it typically drops 15% every 18 months.1 It frequently does so whether in an very “bullish” (positive) market or “bearish” (negative) market. What is not normal is for the market to be very positive with no volatility - which was what we had for most of 2017.
Are my investments ok?
Most likely, this volatility did not set back your financial plan, as we have designed your portfolio to withstand conditions such as this.
However if you have concerns, know that we are here for you. Please feel free to call Dallas or Steve at 859-341-8184, or email us at email@example.com.
Moreover, if you have friends or co-workers that have concerns and need a professional financial advisor to discuss them with, you are welcome to share our contact information with them as well.
The views are those of Dallas N. Horn and Steve Horn and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results. Investments in securities do not offer a fix rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results.
Wall Street Journal, wsj.com