Putting Stock Market Fluctuations in Context


The US economy passed a major milestone this summer: the longest bull market in history.

Starting with the bottom of the market in March of 2009 through August of 2018, the Dow Jones Industrial Average is up 290%, the S&P 500 is up 320%, and the Nasdaq is up 520%. 2018 has also seen more job growth, strong consumer sales and housing numbers, and Apple and Amazon hitting trillion-dollar valuations.

And then in recent days, the stock market got a bit jittery.

To the surprise of no one here at Keen Wealth, the markets are heading through a volatile patch. And also unsurprisingly, TV talking heads and internet bloggers responded to this normal correction the way they always do: lots of panic, lots of scary headlines, lots of hot air that’s making it tough for folks to get the facts.

Let’s take a look at what’s actually going on, consider some history, and look at some possibilities ahead for the close of 2018.

1. So, what happened?

As we’ve discussed before, the market is bigger than any one number, any one company, any one policy change. A recent spike in 10-year Treasury Bond returns is one factor in the current correction. The Federal Reserve raising interest rates is another. Tech stocks have been struggling because of how President Trump’s tariffs continue to affect trade with China, and some investors want to diversify away from these stocks. And there’s also uncertainty about how the upcoming midterm elections will change the makeup of Congress and our economic policies for 2019.

2. How common was last week’s decline?

If you’re the kind of person who’s checking your investments frequently, last week’s drop might look scary. But while the headlines look huge, the October 10th drop was only the third-biggest daily decline of 2018. There were two bigger drops in February alone!

What’s happening now is normal and no cause for alarm.

3. What’s going to happen after the elections?

Politically? Nobody knows right now.

I could really feel the tension and suspense in Washington when I visited recently. Most experts believe that the elections are a toss-up, and we will be in for a long night of vote counting in November before we figure out what the next Congress is going to look like.

This political uncertainty might continue to give the markets some concern. My team at Keen Wealth expects more volatility as Wall St. adjusts to the factors described above, and as both parties sprint to the finish line in some close races.

4. Do you need to make any drastic adjustments to your portfolio?

You know our mantra at Keen Wealth when volatility rattles the markets: stay the course.

Although we don’t know this for certain, history suggests that this correction will probably be temporary. Third quarter corporate earnings reports and the start of the government’s fiscal year tend to cause spikes in volatility during the month of October. Our current political jitters might drag out this volatility into the end of the year, but the markets have rallied in every single year following the last 18 midterm elections.

Remember: volatility is normal. It’s one of the “taxes” we pay as investors for harnessing the wealth-building power of the markets.

Folks who learn to ride their long-term plans through this kind of turbulence almost always end up ahead of folks who try to time their investments to market movements, or who panic every time the market adjusts. The longer your holding period on investments, the less likely you’ll have a negative return. In fact, returns are positive for every 20-year period in the history of the S&P 500. With that said, past performance is no guarantee of future results.

So, if you’re concerned about how the current correction could affect your portfolio, call Keen Wealth and make an appointment with one of my fiduciary advisors. Talk to a pro you can trust before you let a little bad news trigger a really bad decision.








Bill Keen: Last week’s market correction was totally normal. Remember our mantra at Keen Wealth: stay the course.

About Bill

Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

Keen Wealth Advisors is a Registered Investment Adviser. Nothing within this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Keen Wealth Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed here. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.  

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