Tropical Storm Stock Market

Today I get the fortunate pleasure of writing this newsletter just as Tropical Storm Debby rains down on us in North Florida. You likely have less concerns about the storm and more concerns about the tropical storm that just hit the stock market.

Despite everything going on in our political landscape, the recent market crash has nothing to do with politics. As we mentioned in our last newsletter, economic factors such as inflation, unemployment, corporate earnings, and interest rates have a far greater impact on the stock market.

Well, that is exactly what happened. An uptick in the unemployment rate and lower than expected corporate earnings reports sparked fears that the economy may be slowing down. Many investors are going to speculate whether the storm will pass quickly or wreak havoc on the financial markets. Just like the path of hurricanes, things can be unpredictable and change quickly.

Bad periods are quite common in the stock market even in positive years. Since 1980, 61% of all years had a stock market decline of 10% or more, so this downturn isn’t unusual at all.

Market corrections are inevitable and a natural part of the economic cycle. While we cannot predict the timing of these market declines, we can stay disciplined. Quarterly rebalancing forces us to take some of our winnings off the table when times are good and reinvest if the stock market declines.

Remember when our favorite store has a sale, we do not panic but rather enjoy discounted prices. The same is true for the stock market. Rather than panic, we should take advantage of the back-to-school summer sale.

We’ve gauged your ability to take financial risk based on your short- and long-term goals, cash flow needs, and your beliefs surrounding market volatility. With our approach, you are only taking the amount of risk necessary to reach your goals.

We expect storms will happen. Just like we prepare for hurricanes, we help you prepare for whatever turmoil the markets throw our way.

We are here and happy to answer any questions. Please stay safe out there!