Presented by: Bo Thibodeaux
The end of 2017 and the beginning of 2018 brought a 10-month win streak and investors have been enjoying these gains. But at the end of February, we saw the first major market correction since last year and the sudden drop may have some investors worried.
Let’s look at what happened, and what it means for your portfolio.
The S&Ps 500 index ended February down 3.9%, its first monthly loss since March 2017. The whole month continued to be turbulent and saw major stock price swings. For two days, the Dow Jones industrial average dropped more than 1,000 points. These changes were sparked by inflation rising and the 10 year treasury increasing. Financial pundits predict that when markets think that inflation is rising, there will need to be rate hikes, as well.
The market then recouped a big chunk of its losses, but remained negative at the end of February. Between February 1 and March 1, the S&P was down 5.11% and the Dow was down 6.02%.
The volatility was not helped any with the announcement of the Trump Administration’s possible tax on aluminum and steel. In short, the Administration’s promise to impose hefty tariffs on U.S. imports of steel and aluminum sent markets around the globe into a tailspin due to the fears of a global trade war beginning.
What You Need to Know
As we close Q1, there is a lot going on in our global markets and economies. Trade regulations, interest hikes, and stock market swings could make the average investor weary. But, it is normal for the market to pull back after such a long streak of gains and if your portfolio is invested according to your goals and needs, this shouldn’t impact your bottom line for the long-term.
Yes, you may see losses on your statement in March, but most portfolios are set up with long-term gains in mind. For example, if you are saving for retirement and are a while out, your financial advisor may have recommended more risky stocks than if you are just a few years away from retiring. When in doubt, speak with your financial advisor. A reputable advisor can explain your losses in detail and why certain decisions have been made regarding your risk tolerance.
The good news is that our overall economy seems to be doing well, and it’s important to remember that the market doesn’t always mirror the economy. In addition, this drop may be a great opportunity for those looking to enter the market to buy at lower price points. Always speak to your financial advisor before making any sudden decisions, but the popular “buy low and sell high” philosophy may ride out this month.
It is the natural progression of the market to go up and down, so in February and March we saw the first major market correction since last year. This was due in part to the Trump Administration threatening a steel and aluminum tariff, inflation, and many other factors. While investors may have felt uneasy, those taking a long-term approach to their portfolio and financial goals shouldn’t concern themselves with these fluctuations. If you have questions about the market and how it impacts your portfolio, feel free to contact us today.
Bo Thibodeaux is a Financial Advisor offering securities and insurance products through Cetera Investment Services LLC, member FINRA/SIPC. Advisory Services are offered through Cetera Investment Advisers LLC. Cetera is not affiliated with the financial institution where investment services are offered. Investments are: * Not FDIC/NCUSIF insured * May lose value * Not financial institution guaranteed * Not a deposit * Not insured by any federal government agency. 135 West Colorado, LaGrange, TX 78945 (979)968-4500