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Perspective on Recent Stock Market Events

by | Feb 6, 2018 | AHEAD OF THE CURVE |

If we’ve been doing our job properly, and in your interest, you might already be able to guess what our take is on current market news:

Unless your personal goals have changed, Stick With The Plan!

Still it never hurts to repeat this steadfast advice during periodic market downturns. We understand that thinking about scary markets isn’t the same as experiencing them.

So, what’s going on? Why did stock prices suddenly drop after such a long, lazy lull, with no obvious calamity to have set off the alarms? Fast answer …… nobody knows. You will of course have loads of Investment Gurus explaining what has happened and GUESSING what might happen next.

The Financial Media have a field day when short term market corrections occur. Headlines are designed to create panic and they ultimately lead to investors bailing out of their investment portfolios. While the numbers reported may be technically accurate, they are framed to frighten rather than enlighten you, grabbing your attention at the expense of the more boring news on how to simply remain a successful, long-term investor.

Sometimes, market setbacks are over and forgotten in days. Other times, they more sorely test our resolve with their length and severity. We can’t yet know how current events will play out, but we do know this:

  1. Capital markets have exhibited an upward trajectory over the long-term, yielding positive, inflation-beating returns to those who have stayed put for the ride.
  2. If you instead try to time your optimal market exit and entry points, you’ll have to be correct twice to expect to come out ahead; you must get out and back in at the right times.
  3. Every trade, whether it works or not, costs real money.

Instead of fretting over meaningless milestones or trying to second-guess what is next for stocks, bonds and inflation, we believe the more important point is this:

 Market corrections are normal – and essential to generating expected long-term returns.

And the most important point is this:

“Stick With The Plan”

 

Carl Widger
Co-Founder & Director

Disclaimer

Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.

All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified independent financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts