Yesterday’s market declines (the S&P 500 down 3.29%, according to FastTrack data) were entirely within the range of a normal adjustment. Despite the claims of talking heads, this doesn’t appear to be a “crash,” nor is it a reason to panic.
It has been our outlook for the second half of 2018 that the markets could see a bumpy (or even ugly) fall before having a good run-up into the end of the year. We believe the current market volatility plays into this theory.
Those who follow us more closely, know that we’ve been playing defense since early September. And while that caused us to lag a bit in September, that move is now paying off.
As far back as September 1st, we’ve been lowering our exposure to the stock market. The majority of our strategies have been positioned at least one risk level lower than their target (if you are moderately aggressive, then your account is acting more like a moderate account, etc.).
A money-manager friend of ours refers to these proactive adjustments as “shock-absorbers.” It’s not that you don’t feel bumps along the way, but our proactive management can help to soften them.
Earnings season kicks into full gear in the next few weeks, and as of right now, general expectations appear positive. To us, that would suggest that this pullback could serve to shake out nervous investors so the professional investors can start buying again.
We view this volatility more as an opportunity than a major setback, and we are positioned for that opportunity going into the end of the year.
If you have any questions, please contact us. Thank you!