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
July 13, 2018 - Are there many important things to be done when a parent is declining in health that you don’t read about too often? Most definitely — and I’d like to share some lessons learned that might help those of you who...
May 23, 2018 - Investing seems like it should be straightforward: buy when stock is low, sell when its high. Reap the profit. Makes sense especially when you consider the big gains demonstrated by the stock market over the past couple of years. Big...
April 17, 2018 - People want a sense of security — emotionally, physically and financially. The truth of life is that we try to manage a tightrope walk between chaos and order. If somehow we can incrementally achieve some order in a life that...
February 22, 2018 - [embed]https://www.youtube.com/watch?v=f6BWDxM2edc[/embed] WorthPointe works on your schedule. Austin Financial Advisor Morgan Smith explains how he uses his tech tools to meets clients where they’re at, even if they’re laying on a beach in Bali.
February 13, 2018 - As a financial planner, I’ve certainly been getting my share of questions about the recently passed tax reform. In this article, I’ll address some of the most common concerns I’m hearing from clients, but how the changes in the tax...
- What are Options & How Risky Are They?
- Is It Smart to Invest in Cryptocurrency?