The market has recently moved into correction territory as the S&P500, Dow and Russell 2000 have all declined around -10% from it's recent high.
Below is a 1-year chart of the S&P500.
The chart above shows nearly a -10% correction in the market. We notice the pullback has pushed the market to the bottom of it's intermediate term range (low-end of the Bollinger bands) and with RSI at 30.55. It appears the market is reaching a point of being oversold. Technically the market is trying to find a support level.
While these technical indicators can be helpful in understanding the market they do not always predict the market.
Many folks initial reaction is to panic and make changes. While pullbacks and corrections are uncomfortable they are normal functions of the market. Remember markets do go up AND DOWN, they are normally volatile.
I can reassure you about how the S&P500 has averaged 10% per year for the last 50 years* or other reasons why people invest into the stock market. However, I like to also point out that volatility is nothing new, and as you probably know markets will go down and that is normal behavior of the stock market! The slide below shows that the market often goes down before it goes up!
Above is a slide from JP Morgan's Guide to the Markets 2014 Q2 edition.**
While I continue to observe the market and I want to reach out to my client base and followers to ease some of the worry you might be having lately. If you want to discuss anything regarding your account or the market please don't hesitate to call me.
As a reminder you can view your performance reports from Albridge at www.mainaccount.com/ifg. If you have NOT registered recently you will need to go through that process!
1. Past performance is not indicative of future results.
2. Diversification does not guarantee profit nor is it guaranteed to protect assets.
Successful investors have to become successful savers first.
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When markets go down:
Invest more! When the market declines it's a good time to increase 401k contributions and/or put cash to work.
Don't Panic! When markets go down people's natural reaction is to panic and change things. If you have a good allocation and financial plan weather the storm.
Market Performance 2014*:
4.78% S&P 500
-8.57% Russell 2000
-6.18% MSCI EAFE
1.21% MSCI Emerging Markets
5.14% Barclay Bond Aggregate Index
Data from JP Morgan "Market Insights"
*Year to date as of 10/13/2014