As I am sure many of you have noticed, the stock markets have taken a downward turn over the past few weeks. While nobody likes to see a lower portfolio value, it’s important to keep perspective in the face of increased market volatility. Although there is no single reason for major market shifts, there are several factors that we can look at to contextualize these drops. Large tech companies like Google and Amazon posted slower than expected revenue growth. Due to their large presence within the S&P 500, the entire index suffers disproportionately. In addition, the Federal Reserve has been steadily raising interest rates throughout the year and are expected to raise them again by the end of the year. The inflation numbers published by the Bureau of Labor Statistics were also higher than previous months. October is typically a volatile month for the stock market, and when you consider the approaching midterm elections in a particularly hostile political climate, market fears may seem justified.
Despite the disappointing numbers, we need to remember that risk and volatility are fundamental parts of investing that aren’t going away. Oppenheimer has published an article which contextualizes this market correction which is available here. Blackrock has put out a resource that discusses strategies for managing your investments during volatility which you can access here. To briefly summarize, they recommend focusing on portfolio diversity, utilizing dollar cost averaging, and re-balancing your portfolio in accordance with your investment goals. As always, be sure to consult with a qualified financial professional before making any investment changes.
Cheers!