« Back to Blog

The Return of Market Volatility

Posted February 12, 2018

On February 6, in response to the volatility that the markets were experiencing, we sent the following thoughts to our clients and other contacts for whom we had email addresses. (If you would like to be added to this list, contact info@bellinvest.com):

We understand that market dips can be unnerving, especially after a year without one. 2017 was an aberration in terms of the low volatility experienced and the lack of a meaningful market decline. This year started out much like the prior with strong gains and little in the way of volatility. Since last week through yesterday’s market close, however, volatility has picked up and we have seen a 6.8% decline in the U.S. stock market.

The legendary finance professor at Wharton, Jeremy Siegel, called this pullback a “shakeout,” which is good for the market as it reminds investors that stocks do not go up every day. On average, the market pulls back by 5% three times a year and pulls back by 10% once a year — neither of which happened last year.

Over the last few trading sessions, investors have been concerned that the FED will move faster and more aggressively than anticipated given we have 2.9% growth in average wages from a year ago and an historically low unemployment rate — which in turn is driving fears of inflation. The 10-year treasury yield hit 2.85% before coming back down to the 2.79% yesterday.

In brief, we are finally returning to normal market volatility, which is healthy. We do not believe that this activity should change the strategy of long-term investors.

For more Bell communications on the topic, please see the following:

“A Global Correction is Overdue”February 2, 2108 market analysis, bit.ly/mrkt-analysis
“Why is the Market So Strong, and What Could Go Wrong?” – January 17, 2018 webinar video, bit.ly/BellMarketStrong
“Don’t Be Afraid of a Market Pull Back” – November 2, 2017 finance blog post, bit.ly/2nTtSkq

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up for our monthly Bell e-News.

To get the latest news and updates from us, please fill out the form and click "Subscribe" to receive our e-newsletter.

Market Analysis

White paper feature image
Technology and Small Caps Score Best Sectors for Q2 and 2018 (7/5/2018)
July 3, 2018

The Dow Jones Industrial Average and the S&P 500 reached the end of the second quarter well below th...


Video

video feature image
Is This as Good as It’s Going to Get?
June 27, 2018

Join us for our quarterly Investment Committee Update online webinar.


Publication

bellinvest publicaion
Trump Punishes Craft Beer
April 19, 2018

Thanks to the St. Patrick’s Day editorial page of the Wall Street Journal, I learned about America...

Latest News

NorCal Conference Inspires

Every year, representatives of the Bell Investment Advisors financial planning staff attend the Financial Planning Association NorCal Conference in San Francisco as part of a continuing desire to maintain the highest standards of excellence in Bell’s financial planning practices, as well as to pursue ongoing professional education. On May 29 and 30 of this year, […]

Latest Tweet

Connect With Us

bellinvest 20 year