Friends
Simply put, we’re dealing with a bear market. More than half the stocks in the S&P 500 are down more than 20% from their highs, so though the market averages aren’t down 20% in total (the official measure of a bear market), we’ll call it what it is. Heck, by the time a market is down 20% and officially tagged with the bear market moniker, most of the damage has occurred. Also, perhaps by me declaring that we’re in a bear market, stocks will go up to prove me wrong. Fingers crossed.
Forget current economic numbers like low inflation and strong retail sales numbers, for market participants live in the future, not the present or the past (perhaps there’s a “Christmas Carol/Scrooge analogy in there somewhere). Across the board experts are declaring that an economic slowdown is imminent. That sentiment has permeated the investor psyche, and money continues to flow out of stocks into cash. As we’ve mentioned, sentiment is a powerful thing. Lack of confidence in the future begets behavior that feeds on negative sentiment. That brings us to today’s market action.
By the close, the Dow Jones Industrial Average was down 496 points to finish the day at 24,100. The S&P 500 was down 50 points to close at 2,600. Gold was down $5 to trade at $1,242 per ounce, while oil was down $1.55 to trade at $51.07 per barrel WTI.
So, what do we do about all this? Well, we’ve allocated ahead of time in preparation of times like this. Each of us knows what volatility we can accept. We know bear markets are common, one would even say necessary. We make adjustments where we deem necessary, and try to take advantage when things are on sale. Most of this depends on each individual’s personal situation. Remember, an investment plan is for a lifetime. We will face more bear markets in the future. That’s the price of admission for the toll road that we have chosen as our path to financial success. It’s a bear market. We’ll deal with whatever it ends up being, just as we will the next bear market, and the one after that. And, most importantly CHJ will be with you, riding shotgun, as you travel your road to financial success.
Have a great weekend everyone.
