It’s here. Stock market followers have only been talking about the possibility of a stock market correction for the last year to 18 months, and now we are here in correction territory. Volatility has been significant with wild swings taking place intraday. To all of you who are keeping calm and carrying on, we applaud you. It is not easy to stand by and watch the market move dramatically. It is human nature to want to do something, anything.
That’s why we have been planning for the eventuality of the correction and talking about it with you. It is why, while the market was moving in our favor, we have been reexamining portfolios to ensure they are as efficient and diversified as they should be. It is why we have been talking about risk tolerance with you and making sure we understand your goals. It is precisely in these times of stress that we remain clear-eyed in our focus on your goals, your long-term plans for your portfolios, and do not get caught up in the clamor.
Ellis Phifer, Managing Director at Raymond James, quoted Thomas Edison when writing for The Morning Notes on August 27, 2015. “The best thinking has been done in solitude. The worst has been done in turmoil.” That is a good word for us as we deal with the economic turmoil all around. Turmoil can cloud judgement and lead to decision-making out of emotions rather than sound, well-reasoned judgment.
Recently, the word “blip” appeared twice in the newspaper: first, as the four-letter answer to the crossword clue “minor inconvenience” and second, as a description of the short-term downturns that sometimes occur in the market’s long-term upward trend. We may not know the duration of this correction, or if it will end up being only a minor inconvenience, but we do know that keeping the long-term focus on the ultimate goal is the way to move forward.