Anyone that is paying attention to the current economic news and is following the stock market is aware that we are in the midst of a very volatile situation for investors. After significant losses last week due to concerns about the lack of a debt compromise in Washington, the market has continued its losses this week despite a temporary resolution to the debt situation.
Why is this happening? A number of significant issues are still swirling around that have investors rattled. Continued concerns about situations in European countries, disappointing economic reports, concerns about a potential ‘double-dip’ recession, and a general dissatisfaction with the overall debt deal are some of the reasons that have investors running from stocks at the moment. This makes for an uncomfortable situation for many investors- no one likes to see a 500+-point decline in the market that we saw yesterday! Despite a surprisingly good jobs report this morning, the volatility has intensified today as we end the week. This morning alone, the Dow went from a 100+-point gain to a 200+-point loss, before climbing back to a gain of over 100 points- all before noon!
There is an obvious question that many investors ask themselves in times like this: What should I do? The best answer is to review your personal goals and risk tolerance to make sure that there have been no changes. Volatility and losses in the market often cause poor investment decisions due to emotion or panic, but a more disciplined approach is usually the best practice if you have goals that are more long-term. Periods of volatility are a good opportunity to review and tweak your current investment plan rather than making drastic changes due to short-term losses.
Above all else, please contact your Wealth Manager or Financial Advisor if you have concerns about the current situation or if you are unsure of the best path to take. This is often more important in times like these than when things are proceeding smoothly and according to plan. After all, that is why you retain their services, and they will be happy to help guide you through these turbulent waters.