Recent questions surrounding slower growth in China’s economy, the second largest in the world, have led to concerns about the potential impact on global financial markets and prompted a dramatic sell-off in global stocks. China’s exports, fixed-asset investment, industrial production and auto sales all slowed dramatically in July. The People’s Bank of China recently devalued the country’s currency by about 4%. A slower economy in China means fewer export opportunities for the eurozone and various emerging markets around the world that have been feeding China’s growth. We are monitoring that situation, as well as sectors of the global market, every day.
- Relatively large swings in the market have been typical, as the S&P 500 has fallen by at least 7.5% every year since 1995.
- The S&P 500 Index rally since 2012 is the fifth-longest since 1930 without an intervening 10% correction.
- The latest market sell-off has happened after the bulk of earnings releases have been completed, suggesting to us that investors are reacting to macro events and fears.
Short-term declines and daily fluctuations can be frustrating. We believe, however, that they can also create buying opportunities for long-term investors. Our investment team meets every morning to not only look at what has already happened, but to analyze what events mean over time, and what action might be best for our investors with an eye on the long term. Remember, a strong financial plan is developed with a sense of clarity and perspective based on your long-term goals.
Here are a few key investing concepts to keep in mind:
- Follow a solid investing strategy rather than emotion.
- Don’t let a short-term reaction overtake your long-term plan.
- Invest regularly and stay committed to your goals.
- Work closely with your advisor to consider all your investment options.
Past performance is no guarantee of future results. Investment return and principal value will fluctuate, and it is possible to lose money by investing.
The S&P 500 Index is composed of 500 selected common stocks chosen for market size, liquidity, and industry grouping, among other factors. Investments cannot be made directly in an index.