Mitzi, my mom’s dog, doesn’t get on the couch except when
there is a thunder. One clap of thunder
and Mitzi jumps right up for the comfort of my mom. As soon as the thunder subsides, Mitzi goes
right back to sleeping on the floor. Not unlike Mitzi the dog, the markets get
spooked when the equivalent of thunder causes alarm.
Another sell-off happened on July 10th as
well: after the minutes release the
S&P 500 shot up and then sold off roughly 0.60%. Where are we since the last Fed sell offs?
Despite the initial reaction, the S&P 500 is up since
each of those Fed Minute release parties.
Like most of the items in my commentary, I use this as an
example – an extreme, short one at that.
It doesn’t tell you to invest or not to invest in stocks; however, it
does show that markets can move quickly without fully digesting what is
presented.
At times this can be a signal (times are changing) and at
times it can be noise (a blip, but the trend doesn’t change). The key is to try and distinguish between the
two, but that can be difficult. Thus,
the most important takeaway is not let emotions dictate your investment
decisions, which can lead to buying at the top and selling at the bottom.
Having a plan in place and executing that plan is the best
way to keep yourself in check, minimize risks, and subsequently gain long-term
returns.
Past performance is no
guarantee of future results. Diversification does not guarantee a
profit or protect against a loss. International investing involves special
risks, including, but not limited to, the possibility of substantial
volatility due to currency fluctuation and political
uncertainties. The views and opinions expressed herein are those of the
author(s) noted and may or may not represent the views of Capital Analysts,
Inc. or Lincoln Investment. Nothing in the above writing should be taken
as an investment recommendation.
