It is very easy for investors to become complacent with the returns experienced over the last twelve months. As we close out September we come back to the reality that volatility still exist and markets will fluctuate. Last week was an excellent example with 200 points swings in the Dow over a period of 48 hours. Many investors were asking last Thursday if this was the big correction. By Friday morning the tide and turned and the “never mind” seemed to be the conversation of the day.
So what did we learn? Volatility is not a bad thing and can present excellent buying opportunities. That a 200 point decline in percentage points is only about 2%; hardly a doom and gloom event. Timing a market is impossible. Just think how you would feel last Friday afternoon if you would have sold out on Thursday.
We are now entering the strongest part of the seasonality of markets. Remember the old saying of sell in May and buy after Labor Day? Also, we have the midterm elections and beginning of 18 months of political focus which has been historically positive for the markets. Therefore, this minor selloff is actually a positive if history is to be believed.