With the carnage in the financial markets last month, I thought a little historical perspective might be helpful. October of 2018 saw the worst monthly performance for the S&P 500 since September of 2011 (down 6.8%). The damage was even worse for the tech-laden NASDAQ Composite; it had its worst month’s performance since November of 2008 (down 9.2%). The major international stock benchmarks were down in this same range. Adding insult to injury, bonds were down slightly as well.
Volatility of this magnitude is fairly rare as evidenced by how long it has been since we last experienced such sharp drops. Thankfully, the month of November is off to a positive start. Yesterday’s unsurprising election results have been greeted with a yawn from the stock markets, which are up modestly this morning. I continue to believe this recent correction will prove to be just a pause in a longer-term uptrend for stocks due to global stock valuations being attractive, economic and earnings growth projections being positive, and no alarm bells being rung by the Treasury yield curve.
Glenn S. Rank, CIMA®
Certified Investment Management Analyst®