Market Volatility

Ryan Roloff |

Given the volatility of the past week, we wanted to provide an update.  Cetera released this research report after Friday's 666 point drop in the Dow Jones Industrial Average, but before Monday's 1175 point decline.  We were expecting that they would update it, but as of today, they have not - so we are posting it as it was written - as the thoughts and insights haven't changed, just the numbers.  It is especially important to note that large drops can occur in all types of market environments - rising, falling and flat markets. Your portfolio allocation should be based on your time horizon and risk tolerance - as day to day fluctuations have very little to do with investing for goals years in the future.  We are always on top of what is happening in the markets, however, given our experience and perspective having studied the entire history of the stock market, and managing client portfolios for almost 20 years - we make allocation decisions based on well thought out insight, rather than emotion.  Please don't ever hesitate to call if you just want to discuss things, knowing that we are here for you.

Cetera Investment Management Sightline Feb 5, 2018

Here is another chart that we thought was very relevant - this shows the annual returns of the S&P 500 (the bars), as well as the largest intra-year decline (the dots).  You will notice it is quite common to have drops of 10% or more, even in years with significant positive returns.  Volatility in the stock market is normal - and is why many investors settle for the poor returns of guaranteed investments even when investing for long-term goals.  Having safe emergency funds and conservative investments for short-term needs is important, but investing for growth is critical to help meet long-term goals.

Source: J.P. Morgan Asset Management, Guide to the Markets Q1 2018

All investing involves risk, including the possible loss of principal.  There is no assurance that any investment strategy will be successful. Indices are unmanaged and cannot be invested into directly. Past performance is not indicative of future results.