Did You Stick To Your Plan During The Last Correction?

By: Ross Bramwell

05/10/2019

The S&P 500 fully recovered from its fourth quarter market correction last week and reached a new high. The recent recovery took only four months, which is precisely the historical average for recoveries after stock market corrections.

This is a good reminder that a large part of investing is emotional and behavioral. Although we know we need to be patient, it is often hard not to dwell on short-term performance and to block out the noise. When we’re able to do so we are in a much better position to stay invested, stay on track with our financial plan, and achieve our long-term goals. As the saying goes, the only way to achieve long-term returns is to stay invested for the long-term.

The market was able to recover this year as the recession that was so feared to be imminent, has yet to materialize. Inflation is tame, the Fed has paused on any future rate hikes, and wage growth continues to be positive. Even as last week’s surprise positive GDP reinforced, the U.S. economy continues to grow even if it is at a slower rate.

However, we acknowledge that risks are still out there. Although economic expansions do not end just due to age, we believe the economy is experiencing more late-cycle characteristics.  We expect market volatility to remain as a normal part of the investor experience. Markets are inherently choppy and volatile. We believe the best way to manage this is not to jump in and out based on emotions, but to main a diversified portfolio that expects a bumpy road ahead.

S&P 500 Reaches New Highs After Fourth Quarter Correction

Disclosures: The information reflects Homrich Berg’s views, opinions and analyses as of April 29, 2019 unless otherwise indicated, with no obligation to update. The information is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any investment product. The information does not represent legal, tax, accounting or investment advice; recipients should consult their respective advisors regarding such matters. Certain of the information herein is based on third party sources believed to be reliable but which have not been independently verified. Certain of the information is forward-looking in nature and reflects Homrich Berg’s outlook and forecasts as of the date of the document and is not to be relied upon; actual results may differ materially. Past performance is not a guarantee or indicator of future results; inherent in any investment is the risk of loss.