We hope everyone is having a good week. We wanted to send a quick line about the current market volatility. This week the S&P 500 has traded around correction territory, down about 10% from the highs set in September and the developed international and emerging markets are off 18% and 25%, respectively, from their highs set in January*. While nerve racking, we don’t think there is reason to sound the alarm. This type of market movement can be unsettling but is very normal and an inevitable part of investing. On average, declines of 5% or more happen about 3 times a year and declines of 10% or more occur about once a year^. The overall economic outlook remains very positive. Corporate earnings have increased by more than 20% over the last year and U.S. economic growth has continued to increased, as measured by GDP, which notched its best performance in nearly 4 years**.
We think that this is an emotional reaction and encourage our clients to stay focused on their long-term goals. We will be in touch if the market continues to move lower and you can expect us to take advantage of the opportunities that present themselves. As we discussed in our event we held last week on behavioral finance, these ups and downs happen and they happen pretty often. Over entire market cycles they can look small, but in the moment they certainly don’t feel that way so please let us know what questions you have or if you would like to discuss in more detail. We are in the office and available.
Thank you for your continued trust and confidence.
Sincerely,
Allie & Steve
^Capital Research and Management Company
**Reuters
Disclosure: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
