I am writing because we have received some calls with people concerned about the recent market decline. So, is the sky falling? In our opinion, the market drawdown we have seen over the last few trading sessions is part of what we see as a normal, healthy and overdue correction. The truth is, we have had super low volatility for a long, long time. The recent activity is much more normal for markets and increased volatility should be expected as we move forward – I’m not sure if it is to this degree though J. As was suggested in the last blog, when people pile on and greed takes over, uncertainty or perceived changes can make people very fearful and they go running for the exits. In this case, we believe it was triggered by the Friday jobs report showing wage gains increasing. That caused a spike in interest rates and fears of inflation.
So, while that is the short run view, we want to remind you, the trigger was fundamentals remaining very strong. You gotta love reversion – now good news is seen as bad news. By the way, interest rates are just about where they were when this thing started on Friday. Sit tight. You know we are always watchful. We feel if this persists, we may even uncover some opportunities.
As always, if you have additional concerns, we appreciate your phone calls. So sit back and enjoy the upcoming Olympics. Go USA!
Donald J. Phillips, CFP®
Greater Midwest Financial Group, LLC.
3222 Rice Street
St. Paul, MN 55126-3047
Phone: (651) 490-9790 Fax: (651) 490-9788