Wealth Plus Market Update
by Alyzah Kaharian on Dec 21, 2018
Given recent market volatility, I thought it was a good time to update you on the changing financial landscape. The nature of life is to be cyclical and this is true of the financial markets. I have previously addressed, and we are now seeing demonstrations, that the U. S. stock market is now either going through a correction or now has become a bear market. The definition of a bear market is a market in which prices are falling. It starts after prices have fallen 20% or more than their 52-week high.
A market correction refers to a significant decline following a short-lived upswing in market prices. The market considers a fund’s or stock’s true value and makes a “correction”. This does not mean that these companies are losing value but rather the market is correcting share prices after the upswing to reflect actual stock values on paper. A correction is not the same as a crash but does give cause for concern and attention.
Most long-term investments can weather a market correction. The important thing is to not panic but rather seek sound advice when reallocating investments. Asset diversification, including a well-managed portfolio, is the best tool during a market correction. Our clients’ accounts are comprised of a diversified mix of various investments among different asset classes. This reduces the impact of market volatility.
No one can predict how long a correction will last or how deeply it will affect the stock market. What we do know is that it is a natural part of investing. As always, we welcome the opportunity to review your investments with you and can make recommendations for changes.