By now, you have probably seen the news that the stock market is taking a dip. There is a lot of information coming at us fast as we watch to see what happens next. We are here to answer a few of your questions.
Why is this happening?
As she finished her term as the Fed Chairman on Friday, Janet Yellen made a comment that prices are on the high end of their historical ranges. She made a point to mention that this didn’t mean that they were overpriced necessarily, but just factually at the top of those ranges.
The market responded with sell-offs, leading to this dip. Either the investor independently believes that prices are too high or is concerned that the comment made by Yellen was right. Whichever the case, this dip does not eliminate the possibility of a positive year-end.
Is this bad?
Not necessarily. It cannot be understated that market corrections are a part of normal price volatility. They are a sign of a healthy market, doing what a healthy market should do.
How do dips like this normally play out?
Our industry tends to look for patterns in market cycles. We want to compare current environments with previous experiences. But history has proven that every correction plays out differently and every market cycle has unique characteristics. Market cycles are nearly impossible to forecast precisely.
What does it mean for me?
If you have a long-term investment strategy, short-term corrections like this are just noise, a blip on the screen. Our portfolios are designed to transition through these types of corrections safely and our investors are positioned to benefit from a healthy market over the long-term.
Should I be worried?
The short answer is probably not. But this is your money and your investment. And we know that comes with some emotions. Where you are financially invested, you are emotionally invested.
Here’s what we’ve found to be true. Over the long-term, history has shown that the market tends to provide excellent returns to patient investors.
If I am worried, what should I do?
Talk to your advisor. Especially if you are currently retired or about to retire and are concerned about income you are taking from your portfolio. Your advisor can help you evaluate whether your strategy is being directly impacted and if any changes need to be made.
Other articles filed under Austin CFP Team Posts
November 9, 2021 - Here’s a fourth quarter “Top 10 To Do List" of items that have a year-end deadline: Make sure you take out your Required Minimum Distribution (RMD) if it applies to you or be liable for a 50% penalty on the...
June 4, 2020 - Thank you to the Austin Business Journal for including us in the Financial Planning Firms List for 2020. You can find us on the Austin-area investment management firms RIA list. We’re so thankful for our clients and friends who have...
June 20, 2019 - Millennials have come of age in an era like no other in history. This generation has made its mark in a time period that’s been a supernova of information accessibility, interpersonal connectivity and technological disruption. It’s no wonder this generation...
June 5, 2019 - We make it a priority to give back to our communities and support our own in their endeavours to do so. On April 12, WorthPointe was a table sponsor of the Susan G. Komen® Greater Central and East Texas "Big...
April 9, 2019 - We are so happy to see WorthPointe on AdvisorHQ’s Top Financial Advisors in Austin, Texas, to partner with in 2019. As examined in the article on the Advisor HQ Website, we know it’s difficult to know where to start when...
- Have You Seen Who Made the Best-In-State Forbes List?
- No Goals? No Problem — If You Focus on Habits and Systems