Good Afternoon,
Unless you have been living blissfully "off the grid" with a pina colada in hand, you may have noticed that the stock market is in the throes of panic selling.
Over the last few weeks, tariffs, trade disputes, and political drama have been dominating the news cycles—and of course, with negative news comes the stock market's least welcome companion: volatility.
Lately, it seems "unprecedented" has become the buzzword of choice. In reality, we are not in uncharted territory. If history has taught us anything, it's that markets are quite often unpredictable in the short term but remarkably reliable and resilient over the long run. Here are a few interesting examples:
- 2020-Covid 19 Pandemic
Between February 19, 2020 and March 23, 2020 the S&P 500 fell nearly 34%....in just 33 days! The United States was closed for business, people were dying, there was no end in sight and yet, the market made a complete turn around, erasing all losses and ending the same year UP by just over 16%.
- 2018-Fed Rate Hike Fears
From September 20, 2018 to December 24, 2018, the S&P 500 dropped by 20%, just shy of a bear market. By April 2019, the market had fully recoverd and went on to end the year UP by 28.9%!
- 2007-2009 Global Financial Crisis
Who could forget this one! From 2007 to 2009, the market slowly dropped by 57% as a toxic cocktail of greed, leverage and bad bets caused widespread defaults on "creative" mortgages. Lehman Brothers collapsed, panic ensued, credit markets froze and recession followed. The crisis led to major changes in how banks, markets and regulators operate. The stock market took some time to recover from this prolonged event but gained 300% over the next decade.
What do these examples have in common? In the moment, each felt like an unprecedented crisis. And each time, markets recovered, often sooner and stronger than anyone predicted. The market rarely moves in the direction we expect. Market forecasting might be the only job where you can be wrong most of the time and still get invited back on CNBC!
All of this is to say that market volatility, while uncomfortable, is part of the long term journey. While tariffs and trade tensions may rattle short term market sentiment, they don't derail long term financial plans. I am closely monitoring the market and tracking what's driving the swings so that you don't have to! Whether it is time to rebalance, identify opportunities or simply stay the course, I am here for you as a guide, a sounding board and an advocate, every step of the way.
Warm Regards,
Johanna