What’s Going On in Our Market?
What is the cause behind the market volatility we’ve noticed in October? Here are our observations.
If you’ve looked into market activity lately, you’ve probably seen a lot of red on the charts; there’s been a lot of volatility in the month of October, primarily in a downward trend.
My clients have been asking incessantly about this lately, and when they do, I try to stress to them that in our opinion, this a technical correction versus a fundamental correction.
A fundamental correction would mean there are excesses in our economy and that our numbers are bad—but we’re not seeing that right now.
So we believe it’s a technical correction, meaning the markets have to re-energize to continue to move higher. They do this in one of two ways: They can consolidate by flatlining, or they can consolidate by going down.
Unfortunately, our current market is consolidating by going down; it’s re-energizing for another upward jump. Yes, this is the longest bull market we’ve had in history, but remember: Bull markets don’t die of old age, they die from excess. We’ve had extraordinarily good earnings growth in corporate America. We have corporate tax cuts and deregulations which continue to help fuel our economy.
There’s nothing negative we’ve seen in the market that suggests a recession is imminent. When the dust settles and the smoke clears, we should be just fine.
If you have any questions or concerns about our current or future market, feel free to reach out to us. We’d be happy to speak with you.
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