Markets Swoon as Expected

February 24, 2022 – Stock market valuations have swooned yet again today with investors taking some risk off of the table in a broad-based sell-off that has seen some stock market indices plunge nearly 2% in mid-day trading. As of this writing, it is anyone’s guess where the Dow Jones Industrial Average and the S&P 500 might land by the end of the day.

Today’s market volatility caps off weeks of choppy trading, wild swings in the market (more down than up), and generally lackluster market performance since the beginning of this year.

Russia’s invasion of Ukraine remains the front-page issue behind this most recent market slide, but let’s not forget that other pressures on the economy remain. Most notably, investors worry about continued and worsening inflationary pressures, the risk of a “wage price spiral” and the Federal Reserve’s increased target for rate hikes from three to possibly five or more this year.

Any one of these events or economic pressures could have the most confident investor wringing her hands, yet still the Dow Jones Industrial Average (which as of this writing was hovering around 32,600) isn’t much lower than it was in March of 2021. For greater context, consider that in March of 2019, well before the beginning of the pandemic, the Dow Jones Industrial Average was at approximately 25,500 points.

Giving up a year of gains isn’t something that any investor would prefer to do, but a properly allocated portfolio built with an eye toward an investor’s timelines and risk tolerance should be able to weather this minor setback.

It is easy to get caught up in the ‘expert’ predictions that seem to range from ‘this is a phenomenal buying opportunity’ to ‘expect a 50% drop in the markets in the coming days’, but it’s important to remind ourselves not to necessarily act on market predictions.

As a team of educated and experienced independent professionals, CWA’s advisors have learned over the course of many, many market cycles that buying into the panic or acting on a ‘prediction’ inevitably leads to emotional decisions.

If you are feeling stressed about the markets or simply wondering how this market cycle might be affecting you, please don’t hesitate to call our office and ask to speak to your team of advisors, we understand that current events can be a bit overwhelming, and you may be feeling the need to be proactive.

Rest assured, the markets will go up and they will go down, as they always have, but the one thing that you can count on is that our team is keeping an eye on your investments so that you don’t have to.