Friends

Well, this is getting ugly now. The downturn in stocks accelerated today and the White House doesn’t appear to be willing to throw a lifeline to market participants. “Might be some short-term pain” seems to be the message and pain there is. Nasdaq for instance was down 4% for the day and now down more than 12% from recent highs. Tariffs are certainly part of the equation, but I think that stocks, having been somewhat stretched, were looking for a reason to go down anyway. Add to that the notion that the President’s policies are mostly harmful to growth, at least in the short run, so you have analysts starting to use the R word and stocks do not like that.

As for today, it was a mess. By the close the Dow Jones Industrial Average was down 890 points to finish the day at 41,911. The S&P 500 was down 155 points to close at 5,614. The aforementioned Nasdaq was down 727 points to close at 17,468. Gold was down $21 to trade at $2,892 per ounce, while oil was down $1.03 to trade at $66.01 per barrel WTI.

The bulls are hoping that the markets begin to look past the current discomfort and see the more market friendly issues like taxes and regulation that will likely come in the future. But if we were to head towards a recession then this reset in stock prices is warranted and normal. As I’ve said for weeks now, buckle up-this volatility is likely to be with us for a while. We’ll get nice rallies along the way, but the down days will be stressful like today. I always like to remind folks that the returns over time on stocks is higher than other instruments like bonds and money market funds because of the volatility inherent in equites. You get the premium return over time in the stock market by accepting volatility along the way. Money market accounts aren’t volatile; thus, you accept more muted returns over time. That is why most investors have a mixture of more volatile investments and less volatile investments. Sleeping at night is important too.

Have a nice evening everyone.

Jim