All of a sudden, the stock market seems to have hit a rough patch. Most indices have been rocked, giving up a significant part of the hard-earned gains of the past year or more. But why? And more importantly, what moves should you make?
According to Burt White, LPL Financial’s Chief Investment Officer, “At times like these, when markets are moving lower, we need to remind ourselves that market downturns are a part of investing. Yet, these downturns in the markets are typical and actually serve as a foundation from which markets can move higher.”
The biggest culprits
China, for starters. White states, “The market has become concerned with the steadily slowing economic conditions in China. These conditions have created concern that China will not be able to continue to achieve strong levels of economic output. But China has just begun to utilize its significant capacity to unveil monetary and fiscal policies as an economy-boosting growth driver.”
As well, the current decline in oil prices is largely indicative of a larger global slowdown. But most consumers benefit at the gas pump and in their heating bills. White contends it’s a “bigger economic and earnings benefit than a drag. Oil price declines weigh heavily on the earnings of energy companies. However, the underlying strength of corporate America is masked behind the likely transitory headwinds caused by the energy industry.”
White believes volatility will likely linger for a while yet. “However, in order to garner gains, we have to weather the volatility. Therefore, we need to maintain our long-term focus and perspective as we move through some of these market bumps.”
Still concerned about what lies ahead? Contact LMIS for a complete and free portfolio review at (616) 234-6524, or go online to lmcu.org/investments.