Thursday, 25 May 2017
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Market Slide

It has been a wild week in the stock market.  As of now (8/24/15 at 9:35 am central), the S&P 500 is down 9.6%, developed international markets are down 10.4% and emerging markets are down 13.2% since they opened one week ago on August 17, 2015.  With a large drop early today in all of these markets.  That can be disconcerting to anyone investing in the stock markets. 

The press is not holding back.  Here are a few web headlines:

CNN – GLOBAL SELL-OFF (in large font bold)

Forbes – Dow Sheds More Than 1,000 Points After Opening Bell (don’t check and see its down 342 points now)

Fox News – WALL STREET MELTDOWN (in large font bold)

The Wall Street Journal – Dow Pares Losses After Plunge But Still Down Sharply in Global Rout

All of these sound scary (at least the Wall Street Journal provides some context).  My wife even called to say that they broke into her radio program to provide a special report on the stock market drop.

No one knows what the stock markets will do in the short-term.  According to Bloomberg Business historically after a 5%+ drop in a week for the S&P 500, 71.4% of the time the return for was positive over the next 12 weeks.  See full article here: http://www.bloomberg.com/news/articles/2015-08-24/here-s-what-usually-happens-to-markets-after-the-s-p-500-drops-five-percent-in-a-week.

 

Remember the press is in business to get more reader/viewers.  Sensationalizing is the way they attract more readers/viewers.  Keep a long-term perspective on your investments and do not worry about short-term market fluctuations.  I am not predicting that the markets will be up in the short-term, but I do believe that long-term investors will be rewarded for living with the volatility of owning a well-diversified portfolio designed based on their specific situation.

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