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Health & Fitness

Stock Market volatility – what to do?

2013 in general was a terrific year for investors in the stock market. 2014 is off to a more volatile start. Last week, the Dow Jones Industrial Average falling 318.24 points, or 2 percent, at 15,879.11, down 3.5 percent for the week, its worst since November 2011, and off 4.2 percent since the end of 2013. The Nasdaq declined 90.7 points, or 2.2 percent, to 4,128.17, a weekly loss of 1.7 percent and down 1.2 percent for the year.

 

This volatility does not come as a surprise.  As noted in my last article put earlier this month, we had set the following expectations: 

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"We anticipate that 2014 returns will not be as lofty as those experienced during 2013.  We also anticipate that volatility will return to the marketplace driven by several variables:

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There is anticipated uncertainty overseas primarily in Asia (specifically in China and Japan), that we feel will also add to the volatility. 

 

 March will represent 5 years since the Market bottomed, and it would not be unrealistic for us to experience a 5-10% correction at some point in 2014. If that occurs, we will stay the course as corrections are normal healthy events in a growing stock market. We do feel that we are now in a Secular Bull Market that may last another 10 years plus".

 

It is important for investors to keep in mind that U.S. markets have seen robust rallies despite currency troubles abroad.  During the multiyear rally, stocks have experienced following the 2008 financial crisis, U.S. markets have had several pullbacks driven by normally short-lived panics, like Greece. In the long run, that didn't stop the S&P or Dow from attaining all-time highs in 2013. However, because of the length and scope of the rise in stocks, each succeeding pause leads more and more market participants to wonder whether the market might finally be entering a substantial weak spot or correction.

 

Previously, those fears have been unfounded, as the slow recovery in the U.S. has ensured the Federal Reserve has kept rates very low while continuing to supply funds to the market with the substantial purchases of distressed bonds in its quantitative easing programs.

 

The Wall Street Journal did cite traders who contended the slide was more a result of "short-term players selling baskets of stocks, such as futures of exchange-traded funds, as a way to protect against losses elsewhere in their portfolios." These traders told the paper they didn't believe investors with longer time horizons were exiting the market "for the most part."   

 

For our long term investors, we have counseled our clients to ride through this expected market volatility in pursuit of achieving their established goals. *Please note: this does not come as a recommendation to invest in the stock market as you should have a discussion with a financial advisor to discuss what plan is best based on your specific needs and risk tolerance.

 

To discuss how this subject or other financial subjects may relate to your own financial circumstance, please contact me at the contact information below: 

Christopher N. Congema, CFP®

President, Investment Advisor

 

Core-X Wealth Management, LLC

900 Walt Whitman Road, Suite 208

Melville, NY 11747

This communication is from Core-X Wealth Management, LLC, a New York State Registered Investment Advisory firm. The information in this blog is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.   

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