With the nice rebound we’ve
had the past few days, we might assume that things are back to normal. Are we?
Even before the meltdown, I’ve been cautioning clients that volatility
is going to be with us. So be prepared
for ups and downs. But Yes, the nice
rebound we’ve had is a welcome change to the dramatic sell-offs. But sell-offs do occur and they are
completely expected.
Do you like movies? (No, I’m not changing topics) I love all
kinds of movies and one of my all-time favorites is The Godfather. There is one terrific scene where Clemenza is
teaching Michael Corleone how to shoot and kill a dirty police officer. Clemenza says essentially that these things
happen every 10 years or so. It happens
and then things go back to being normal again.
Well this is similar to what we’ve had in the stock market the past
couple of weeks. We have corrections and then things balance out.
Corrections do happen and
they happen fairly regularly. So in
essence this was a ‘normal’ correction.
Could we go into a recessionary bear market? Yes but I highly doubt it. I see good growth with one stipulation. Make proper asset allocation based on your
goals and your time frame. I think it’s
best to put things in proper perspective.
Year-to-date, the S & P 500 is off -3.46% and the Dow is off – 6.54%. I prefer to use the S & P 500 because it
is a broader measure of the economy. Actually Nasdaq (essentially tech stocks) is
positive for the year at +1.62%. So in
that context, things don’t look as bad.
So please keep a long term
view and that corrections will happen.
The key in my estimation is to have a portfolio that outperforms the
market with LESS risk. We have those available and would be happy to share them
with you.