So where does all this actually take the market back to? Answer: only to the levels of May last year.
Maybe because we’ve seen in a sustained period of market highs and an extra ordinary run, we’ve forgotten that volatility is an inherent feature of the stock market. Couple this with a 60 year record period of low volatility for global equities and I think we can all agree we knew that the v word would rear its ugly head again.
If you read my recent article reading the tea leaves you will know that up until now events in 2018 had pretty much carried on where 2017 left off. The S&P 500 was up 5.6% in January, and currently this leaves the index down by less than 1% for the year to date.
The stock market and the economy are different things, and they don’t always move together and interestingly, the recent falls link back to strong economic news, especially coming out of the US. Global growth isn’t slowing – it’s predicated to be strong and healthy this year.
Thought for the day
Take Christmas – most of us know we’re paying a premium for everything during the festive season. If we were really organised we would hit the January sales hard and stock up on gifts for the following year. So if you can block out the noise and hold your nerve during such periods, this correction (or January sale) could actually present you with an opportunity.
So whatever the coming days, weeks and months hold, remember to keep your long term goals in focus and that:
- These downturns are only temporary
- If you're a Magus client, you hold a robust and globally diversified portfolio
And finally, remove your finger that is, according to the BBC, ‘hovering over the ‘sell’ button’.
This FTSE 100 view over a 5 year period perfectly makes my point. I don’t recall one single headline that mentions this, but then why let the good news get in the way of the sensationalist bad news?
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