Q3 2018 Market Commentary
During the 3rd quarter, the S&P 500 index did not have a day when it moved higher or lower by 1% or more. Then we moved into October and things changed quickly. The S&P 500 was down more than 1% on October 10th and 11th and then higher by 1%+ on October 12th. As a reminder, we should look at market movements in percentage terms since this gives a more realistic picture of what his happening. As an example, the Dow dropped by 831 points on October 10th or 3.15%. The Dow dropped by a similar amount, 777 points, on September 29th of 2008, but this was a 6.98% change. (1)
The large daily swings will make the news but that does not mean you should adjust your investments. We believe one of our most important roles is to remind you of the portfolio that was crafted specifically to manage your goals and is well-suited for your needs. That portfolio is the best kind to have. In short, changes in your life should change your portfolio, not what the market is doing at the moment.
Day to day market movements will likely have little impact on your long-term financial plan. That is why our 3rd core value is – Invest in the market – Do not attempt to predict it. We believe these market fluctuations are a normal and necessary component of a functioning capital market.
We often find that most investors agree that the day to day fluctuations of the market are unpredictable, but sometimes we will be asked if a “series” of these day to day movements can lead to a trend that can be capitalized upon. If you are curious about this, we urge you to read our post about tactical asset allocation, which is a fancy way to describe that approach.
To conclude, there are several factors that could move the markets in the next 3 months including mid-term elections, trade war concerns or updated economic data. By the time we write our next update, the concerns might be the same or they might not. Our recommendation is to focus on the aspects of your plan that you are able to control, mainly your spending and savings, and to remember the normalcy of market fluctuations.
For further information, check out the full Q3 2018 report.
(1)Source: investing.com/indices/us-30-historical-data, investing.com/indices/us-spx-historical-data
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.
No strategy can ensure success or protect against loss. Investing involves risk including loss of principal.
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.