Scary Times, But Still A Normal Downturn
Right now, though, we are still in a normal downturn. Prices are down, but not by that much. The decline includes a tremendous amount of negativity baked into prices and downward momentum that is feeding on itself. Given all that has happened, I’m surprised it hasn’t been worse.
It may yet get worse, of course (hence today’s discussion). But if it does, it's important to understand why that is happening and what the recovery will look like. In summary, the current downturn may continue for a while but will ultimately burn itself out. In the absence of a recession, that probably won’t take all that long.
The ride has been scary and may get scarier. If you remember the crisis of 2011, we felt the same way. If you don’t remember 2011 so clearly, that in itself is a lesson: what was terrifying at the time vanishes when we look back.
This, too, will pass, and it may not take as long as we fear.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA.