Santa’s sleigh has met some stormy market turbulence following the recent Halloween nightmare on Wall Street. Unless there is a strong holiday rally, you will be probably be very disappointed in your year-end investment statements. After nine years of positive returns, 2018 looks likes it will end in negative territory.
The Federal Reserve board unfortunately raised rates again this month. Trade and tariff talks are heading straight for the cliffs. The US government is shutting down. These three trends have started this most recent avalanche of uncertainty. Our economy and the financial markets here and abroad are reacting by heading for shelter and hibernation. Unless we see some significant good news soon, it’s likely to be a cold winter for your investments. On the flip side, there is a very big “sale” going on in most financial sectors, especially industrials, energy, healthcare, real estate and technology. So, if the risk is appropriate and cash is sitting, we are buying lower priced equities at these perceived “correction” levels.
It’s normal to be disturbed and afraid when the bad news is in your face every day. Here is some perspective on recovery times that may help ease the pain. “The 56 pullbacks since December 31, 1945, dragged down the market by an average of 7%, taking about one month to go from peak to trough. However, the S&P 500 then took an average of only two months to recover all that was lost during these declines. What’s more, the market took only about four months to recover fully from declines of 10.0% to 19.9%. In greater than 85% of all declines of 5% or more since World War II, the market got back to breakeven in an average of only four months or fewer! Finally, the S&P 500 took an average of only 14 months to recover from the more typical “garden-variety” bear market (declines of 20% to 39.9%).” Sam Stovall, chief investment strategist at CFRA Research.
You can find additional perspective in my newly published book “Money Stories” available online at Amazon Books and Barnes & Noble.
Wishing you and your family a year of good health, prosperity, happiness and peace in 2019.
Mitch Fisher and Ryan Fisher