Friends

It’s time for a wellness check for everyone. With the S&P 500 down 10% from its high (or in correction territory) I want to take a moment to put things in perspective. As I mentioned earlier in the week, we know that to achieve long term investment success and be able to grow your wealth you need to have exposure to the stock market. I have been in the investment business for more than 40 years. 15 years ago, we started CHJ. In those 15 years the return on money market accounts have averaged about 1.20% per year. In that same time the S&P 500 has gone from about 1000 to well over 5000, more than a 500% return. But when investing in the stock market we understand there is going to be volatility. We have to accept that volatility in order to achieve a better return on our investment portfolio. Logically, one could surmise that we should put 100% of our money in stocks. But of course, we don’t do that because we also like to sleep at night. Thus, we find a mix of stocks and fixed income that we can handle volatility wise and that is called our asset allocation. We know market corrections like this happen all the time. Indeed, typically from top to bottom we have a 10% drop annually. We got a little spoiled recently as we didn’t have more than a 7% correction last year. And of course, bear markets, where stocks drop more than 20% happen 2 or 3 time a decade typically.

We have talked about why the markets are struggling at the moment. Interestingly, recent economic data has been pretty good. Nevertheless, there is a lot of confusion and consternation at the moment and thus we find ourselves in a downturn. For young investors this is the time you want to be adding to your stock portion of your portfolio. For those of us in or near retirement it is a time to trust your plan. We find the right asset allocation for you just for moments like this. Heck, just in the past 5 years we have seen the S&P fall 38% in 2020 and 20% drop in 2022. Those were tremendous buying opportunities. But of course, we always see that after the fact. Remember, as I said earlier the S&P has gone up more than 500% in the past 15 years. You only get to profit from long-term market advances if you don’t sell during short term market disruptions.

Ok, now that I am done pontificating, let’s go to today’s action. Like yesterday’s CPI number, today’s PPI number was not bad. Indeed, the job market appears to be holding up while inflation continues to slowly decline. That is good news. But yes, we have more going on than that. As for today, by the close the Dow Jones Industrial Average was down 537 points to finish the day at 40,813. The S&P 500 was down 77 points to close at 5,521. The Nasdaq Composite Index was down 345 points to close at 17,303. Gold was up $49 to trade at $2,997 per ounce, while oil was down $1.12 to trade at $66.56 per barrel WTI.

As I have mentioned, the market is very oversold at the moment and we are likely to get some decent rallies soon, but though I know it’s hard to look at every day recently (and maybe don’t look at it every day), we will get through this downturn just like we did in 2020 and 2022, not to mention 2018, 2015, 2011, 2010 (the flash crash), 2008-2009 (financial crisis) , 2000-2002 (dot com bubble), 1998 (Russian crisis), 1997 (Asian contagion), 1992 (Black Wednesday), 1991(Japan crumbles), 1989 (Friday the 13th mini crash), 1987 (Black Monday)… I told you I’ve been around for a while. We’ll let you know how the week finishes out tomorrow.

Have a nice evening everyone.

Jim