By Logan Gilland, CFP®
Painful. That is one way to describe periods like this in the market.
Today, the S&P 500 finished down 1.6%, the Nasdaq fell more than 2%, and the Dow has now entered correction territory. What made today especially difficult was the steady selling throughout the day, with markets closing near their lows for both the session and the year.
The recent selloff continues to be driven by uncertainty particularly surrounding the lingering conflict with Iran and rising energy prices that risk pushing inflation higher again. That has started to shift expectations for interest rates, with markets now wrestling with the idea that rates could stay higher for longer with even the possibility of a rate hike now on the table. As expectations continue to change quickly, the market is doing the same.
Sell-offs like this are never easy to sit through. They are uncomfortable, and they test patience. During periods like this, we remain focused on diligence, attentiveness, and ongoing service to our clients increases even more. These are the environments we plan for. The reason we stress test financial plans, manage portfolio risk levels, and think strategically about exposure to certain areas of the markets are for these times. Also while these declines are difficult, we believe they are also when long-term opportunities begin to take shape.
We will continue to stay patient and keep a steady hand on the tiller. In our view, we are seeing a market that is moving away from what we’ve viewed as concerning and elevated valuations are now becoming more attractive by the day. Periods of market volatility have historically created opportunities for some long-term investors, although future market performance is uncertain.
Talk again soon.