September 2024

Dear Joanna,

You might be feeling a bit of whiplash from all the news - we've got the presidential race ups and downs, that August stock market crash, and now headlines shouting about the worst September start for stocks since 1928. Sounds like a lot, right? Before we get too caught up in the drama, let's take a moment to step back and look at the bigger picture. After all, sometimes the view from 30,000 feet is a lot clearer than the one from ground level.

So what’s going on, and what does it mean? The most brilliant minds have spent their economics careers on the two great mysteries: why do stock markets crash, and why are there recessions? In the end, we can only report that we still don't know, but we do know with great precision that nobody else knows either. 

As your advisor, my job is to help you cut through the noise. While these events make headlines, they're just part of the usual ebb and flow of the financial world.

After a very calm year, the stock market is finally showing some volatility. In fact, it had been abnormally calm before the current correction.

Did you know the U.S. stock market usually experiences a correction almost every year? Here's the scoop:

• A 5% dip is guaranteed in most years. 
• Bigger drops of 10% or more happened in about two-thirds of all years since 1928
• On average, we have experienced a correction of 13.7% annually since 1950.

The S&P 500 is still up nearly 14.83% this year. It was up as much as 20% at one point, but we’re still looking at a double-digit total return in 2024 (so far).

I don’t know if that will hold for the remainder of the year. Still, it’s perfectly normal to experience a decent-sized correction even when the market finishes the year with solid gains, as illustrated below:

So far, this year's correction is actually on the milder side. Could it get worse? Maybe. Could it bounce back? Absolutely. The truth is, nobody has a crystal ball, and a month or two doesn't define a whole market.

Remember, it's totally normal for the market to take a few steps back, even in years when it ends up way ahead. It's like a dance - two steps forward, one step back. Maybe this year finishes with yet another double-digit gain, maybe not.

Maybe we will see another double-digit drawdown, or maybe not.

The key takeaway? The stock market will always have its ups and downs. When investing in the stock market you have to be prepared for both possibilities. Big gains and big losses are par for the course when it comes to investing in stocks.

Volatility is the price of admission when investing in equities, but we know that the stock market rewards long-term patient investors. 

If you're ever feeling uneasy or have questions, I'm always here to chat. After all, helping you stay calm and focused on your long-term goals is what I'm here for.

Dream. Plan. Prosper.