Last week, the Dow Jones was down 531 points to 16,460 — a 3.12% drop on Friday alone. Having fallen 10% from its high, it is now in “correction” territory as this is the first meaningful drop in 4 years. The other US stock indices have fallen similarly, as have commodity prices and US Treasury bond yields.
At times like these, it’s important to remember that such corrections are not unusual; they are normal events, a part of the financial market. Large daily swings in stock values and dramatic financial headlines from around the world can be unsettling, but they are also a time to remind ourselves that stocks don’t always go up in value. While stocks play an integral role in achieving investment goals, there are market corrections along the way.
It is for times like these that we have a diversified global mix of stocks and bonds to smooth out these less certain times. It is also good to remember that in both good markets and “not so good” markets, we have financial goals and a long-term time horizon to enable us to look beyond short-term market volatility.
While we at Covenant Trust Company are always closely monitoring the markets day-to-day, we continue to focus on the bigger picture and invest for long-term success.