So far, so normal. The time to start paying attention will be if the market cracks its 200-day moving average, which for the S&P 500 is now 2,776. Even if it does, however, it is not the end of the world. But it could mean the trend is at risk of changing, which could result in even more volatility. Even there, though, the likelihood is that the market recovers and resumes its upward climb.
So, Should We Ignore Recent Volatility?
It’s hard to do, but for most people, the answer to this question is yes. Are you taking more risk than you are comfortable with? If so, discuss it with your advisor. Not because the market is down, but because you need a portfolio you can live with through difficult times. We are likely not looking at a bear market now. But one will certainly be along at some point—and you need to be prepared.
Big picture? If you are very worried, take a closer look at the risks in your portfolio and make adjustments. If not, sit tight. As always, keep calm and carry on.
Brad McMillan is the chief investment officer at Commonwealth Financial Network.