Well, we have been waiting for/expecting this for quite some time. The last time we saw a week like this was back in 2011. Simply put, the market is correcting. Will we be entering a prolonged bear market? Of course, no one knows. The Russell 2000 (small cap) is down about 12% off the highs, the Dow about 10% and the S&P down about 7%. Sentiment has gotten extremely bearish, very quickly (after a long period of complacency). Back in 2011 we fell about 15% in early August, only to recover most of that loss by year end. We never try to downplay market moves, but we always want to keep things in perspective. These moves are part of the journey. To receive investment returns, one must accept some volatility. We haven’t seen a whole lot of volatility in the past few years, so yes, we were due. We seemed to have been working off the excesses of the market via a rolling correction, which gave the appearance of a sideways move so far in 2015. But over the past two weeks, it has changed. The leaders, which had held the market averages near all-time highs have finally seen selling pressure. Traders had already sold things like energy and materials throughout the year, but in the last couple of days the stalwarts have come under pressure.
Let’s look at the numbers. For the day, the Dow Jones Industrial Average was down 530 points to close at 16,459. The S&P 500 was down 64 points to finish the day at 1970. Gold was up $5 to trade at $1158 per ounce, while oil was down $1.03 to trade at $40.29 per barrel WTI.
Let’s put things in perspective. If you are an incremental investor, enjoy the downturn. You get to buy things on sale. The lower it goes the better. For our clients, we always keep some powder dry just for times like these. We have each of you on a path to your goals. Sometimes there are potholes on that path, but if need be, we fix the flat tire and proceed. Remember 2008 and 2009? Remember 2000 through 2003? Remember late 1997 and late 1998? Remember October 1987? Each and every time stocks not only recovered but climbed higher and higher. We’ll get through whatever this one becomes too. We’ll look for opportunities and not let emotion steer us off the road to our goals.
We are checking our phone technology, but plan to have a call in conference call on Monday. We’ll send out an email with the dial in information. In the meantime, have a nice weekend everyone.