Why Did It Feel So Bad?
The volatile stock market swings of 2018 made most investors feel uneasy. After ten consecutive years of rising stock prices since 2008, as measured by the Standard & Poor 500 Stock Index, stocks had a down year. How far down? 4.38% as measured by that same index. During the ten year period of rising stock prices the average annual return of the S&P Index was 13.11%. Certainly a stock market correction of 4.38% after ten years of consecutively rising prices does not seem unusual or unwarranted. But…..that said, large daily point swings coupled with domestic and international news fostered a good deal of investor anxiety.
Clearly, there are domestic and international issues awaiting resolution that have contributed to the correction:
Federal Reserve policy
Slowing global growth
Given the publicity, a good deal of these concerns should now be priced into the stock market. We will have to be patient and await the final resolution of these issues and their ultimate economic impact. In the meantime, investors should stay the course, keeping asset allocation in line with risk tolerance. For our part, we will continue to monitor events, while looking for attractive investments to take advantage of market weakness.