Update on Recent Market Volatility
Yesterday, the Dow Jones Industrial Average dropped 2% from approximately 24,600 to 24,100. This is the third bout of volatility we’ve seen this year, although only one of those episodes met the definition of a correction, i.e., a drop of more than 10%. Andrew Adams, Raymond James Strategist, offers his thoughts below (following this email), including this key phrase, “We still believe it's going to be very difficult for the bears to force the market down too much while earnings are stronger than they've been in years.”
The Laurel Wealth Planning Investment Committee met just last week where we developed continuing portfolio management strategies on your behalf. For some portfolios, our recommendation is, “Steady as she goes,” i.e., no current change. For others, we’ll be recommending updates and communicating accordingly. Note that the combined experience of the Investment Committee members is more than 100 years; and, as you would expect, we leverage research and analysis from many sources.
Back to the current market volatility. In sharing our current outlook, I quote from our recent (March 31) quarterly market letter to you, which continues to apply:
“Our investment markets have transitioned to the “mature market” part of the cycle…characterized…by volatility. Stocks are like a spring: as their valuations get stretched, they want to pull back and we are seeing that now. However, in this part of the cycle, along with the volatility, we often see attractive returns, although not each and every quarter. Note also, that with volatility can come the opportunity to “sell high” and “buy low,” which can enhance returns over time.”
As always, please let us know your questions and comments. We always appreciate hearing from you.