Recent Stock Market Volatility

The 1 Year graph below relating to the US stock market (S & P 500) puts the market correction during February 2018 in context.


Stock Market

During early February market volatility reduced values by approx. 10% and have since recovered some of this value. At mid-February the index above is back to the opening position in Jan 2018.

Two important points to note when assessing this correction, (I) the growth in the index has been 18% since Jan 2017 and (II) the absence of volatility during 2017 was untypical.

Market corrections are the norm and keep investors from overconfidence. In my experience people are more likely to invest after a prolonged period of higher growth with low volatility. The natural emotion is to invest when “things are going well” – this can also mean “getting more expensive”.  Investment decisions are best made with a calm and detached mindset and the ability to avoid reacting to events.

I have always been a believer in the power of long-term market returns and people focused on the next 5, 7 or 10 years can expect growth assets to provide higher returns than more cautious assets. Looking forward, I don’t expect future returns to be as high as returns achieved in 2009.

Joe McKeogh

Financial Services Director