“Why is the market crashing?”….”What is going on in the Markets?”….”Why are we going down so much?”
ln the latest few days, I have been asked by several friends and family members the prior questions. Little did they know the ammunition they were giving me for a post.
None of these comments were from clients, but just in case you were wondering, I thought it might be a good idea to give you an update on our thoughts and publicly discuss my answers.
Crash is a very harsh term, don’t get us wrong we hate every day that the markets go down, but we understand it is part of the process and it gives us opportunity to review our allocations and take advantage of sale prices at certain times.
While the markets may seem like a roller coaster lately, we have, for the moment only gone down about 7% and are still positive for the year, according to our favorite domestic index, the S&P 500. We would not be surprised to see the capital markets go down further, as again this is part of the process.
Taking a look at the following chart from one of our charting services, TC 2000, we can see a very similar pattern from last year, except one item!
During the year, 2010 we were under our mythodical 10% growth line, which you may recall we discussed numerous times, and wrote about in every 2010 newsletter, however, this year we are above our growth line and falling back to it, which makes it feel as if we are really faltering.
Is there a possibility the economy could slow more? Absolutely and it may!
Using a patient analysis, we as a country/world have just gotten over pneumonia and are still weak, so we must be careful, however we have an awful lot of strong medication in our system to help with the recovery.
Have a Great Day !