Altium's View of Recent Market Volatility
On behalf of the Altium Investment Committee;
We want to offer you our perspective on the current market environment, in light of the significant increase in volatility over the past week. While periods of high volatility may cause you to feel uneasy, we remain steadfast and confident in your investment allocations we have created in accordance with your specific long-term investment goals.
Based upon Thursday’s closing price, the S&P 500 market index officially ‘corrected’ for the first time in over 2 years. A correction is identified by a negative price move of 10% or more. Currently, the S&P 500 index is down 10.25% from its most recent peak and is down 3.5% for the year. The previous correction was in January 2016 when the S&P 500 index fell nearly 12% over a three-week period. The index stabilized over the course of a few months following the last correction and eventually rallied over 50% during the two subsequent years.
Strong corporate earnings and positive economic fundamentals helped drive the markets further into record territory in January of this year. However, concerns over rising interest rates (the 10-year Treasury yield has increased nearly 16% since the start of the year) and an uptick in inflation led investors to question if the market had moved too quickly to start the year. Additionally, as the market started to sell off, many believe that the prevalent use of computer program trading by investors only exacerbated the volatile situation. This form of automated trading tends to result in large trading volume based on technical moves in the market, not based on fundamentals. We still believe underlying economic fundamentals remain strong.
Market corrections tend to be swift and can be unsettling for investors. As we stated in our 2018 market outlook only a few weeks ago, we firmly believe that time invested in the market is more valuable to the long-term success of your investment strategy than trying to time the market.
Gregory Slater, CFA®, CFP®
Chief Investment Officer
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The information contained herein is provided for general informational purposes only, reflects the opinions of Altium which may not come to pass, and should not be construed as personalized investment advice. The performance results presented herein simply reflect the performance of various benchmark indices over a period of time and do not represent any actual performance results of Altium. Past performance is no guarantee of future results and there can be no assurance that any particular strategy or investment will prove profitable. This newsletter contains certain forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the views and opinions expressed in this newsletter will come to pass. Additionally, this newsletter contains information derived from third party sources. Although we believe these third party sources to be reliable, we make no representations as to the accuracy or completeness of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Clients should contact Altium promptly if they experience changes in their financial situations relevant to the management of their accounts.
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