It could be worse: you could have invested in bitcoin at $21,000 and now have less than $7,000.
As Dave Piatkowski told our clients in our “Market Forecast 2018” seminar, stay out of bitcoin and don’t be surprised if volatility returns in the stock market. (Maybe I should buy him a swami hat, but his head probably wouldn’t fit into it anymore.)
2017 was a wonderful year in the U.S. stock market with a return of 21% – and with no trading days with a 1% move or larger. That’s unusual. In January 2018, the stock market went up over 6% in one month. That’s unusual.
So what has changed? Nothing. The economy is growing, corporate profits are great, unemployment is low, wages are growing, and most everyone is getting a tax cut.
Things are great, but that doesn’t mean stock prices can go up forever. There is still a practical value as to what everything is worth and the market evidently shot past this point. The market is digesting new information about inflation and rising interest rates, and perhaps machine trading has taken over again.
Remember, you have a wonderfully designed portfolio with an eye for reducing the brunt of moments like this. That’s why a majority of our clients are in medium risk models with a risk beta score of 60% or less. You are not rocking and rolling as much as the financial news on TV would seem to indicate.
Furthermore, we reevaluated all of our investments at the first of this year and we’re comfortable with our strategy.
No one enjoys seeing all the red on the screen when looking at how your accounts have performed this past week. However, we keep an eye on longer cycles than just one week, one month, or even one year. Our investments are focused on helping you to be successful in retirement.
[Financial Planning and Investment Management Services offered through Dickinson Investment Advisors, Registered Investment Advisor. Statistics and market information provided by Litman Gregory Advisor Intelligence.]