If you haven’t been paying close attention to investment markets, you might be now. While the investment world spent the year 2017 plodding steadily upward with relatively low volatility, the New Year has brought with it over-exuberance in January followed by mild panic in February. Needless to say, markets have definitely caught our attention over the last few days.
Our call to “stay the course” couldn’t be stronger. We have advised folks to expect a market correction for over a year now. Markets will generally experience a 5-10% correction in any given year, yet we actually closed in on a 24 month run without one. It’s been long overdue and actually welcomed after the feverish pace at which stocks were purchased in the month of January. While the economy continues to be on solid footing, no significant changes spurred on January’s buy excitement, and nor did they contribute to the sell-off we have seen the last 2 trading days.
We have seen signs the last few weeks that the correction was eminent, and it looks like those signs proved to be true. Human nature will eventually make even the bravest of investors decide to have some fun with their money somewhere other than in investment markets. Maybe it’s a nice vacation or a home improvement. These fast deployments of cash back into the economy keep the correction just that, a short-lived time of profit taking.
We use these scary times as a window of opportunity to buy into asset classes which were previously overpriced. Just as folks take advantage of sales at a store or a car dealer, investors should take advantage of times like this. True causes for concern come when cracks form in the economic “foundation”, be it increasing unemployment, decreasing consumer confidence, or maybe wholesale trade declines. Those are signs of an unhealthy economy that should give us cause for greater concern. Those times will come again as they always do, but for now, opportunity knocks for those with a sound portfolio strategy to take advantage of the time upon us.