I thought we would provide a quick update on today’s market move before heading home for the day. In case you haven’t seen it yet, domestic stock markets were down on average 3-4% today. The media will overemphasize the Dow Jones Industrial Average’s 831 point loss in attempt to play on your emotions, but this equates to a 3.1% loss.
These losses were driven by a few factors such as rising Treasury yields and recent data showing a slowdown in housing and auto sales. We also started to see a rotation out of the growth stocks and into more value companies such as utilities. Just two months ago, our market commentary discussed how the growth stock rally was becoming extended and due for a correction. We just didn’t expect it to take place in one day!
Again, the media will attempt to make you feel like Chicken Little’s “the sky is falling,” but we do not see this as a cause for panic. The S&P 500 is still up 1.7% in 2018 and is still outpacing practically all other asset classes.
Our position is unchanged. We invest in a diversified mix of stocks and bonds where stocks are used for long-term growth potential and bonds for diversification, downside protection and your next 5-8 years of income needs. Today’s move may seem dramatic, but we see it as normal market activity in a diversified portfolio.
Thanks for working with PDS!
Kurt Brown, CFA
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