Trisha shares her thoughts on the markets, either about specific events that are happening or the market in general. Please check back regularly for new content.
Quarter Three 2021 Update
“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.”
At the start of the summer optimism was running high as the Covid-19 situation appeared to be improving and people were making plans to go out and enjoy activities in person. That enthusiasm led to escalating economic growth and improving corporate profits. Consumers and investors were happy, and the investment markets continued to march upward, almost unabated.
Uncertainty increased in the mid-summer and served to put a damper on sentiment. Medical concerns reignited in the form of the Delta variant, which caused another Covid-19 surge around the world, further exasperating already strained resources and supply chains. Washington wrangling about the debt ceiling raised anxieties and the debate about whether recently elevated inflation numbers are simply a normal reset or something more persistent continues.
With all of this uncertainty as the backdrop during the quarter, it is perhaps no surprise that the investment markets experienced what I would consider the first notable round of volatility this year. All of the major stock and bond indexes fell in September, in most cases giving up their gains from July and August and leaving them slightly negative for the quarter.
While it can be disconcerting to see negative volatility in the markets, it is also incredibly normal. In fact, on average, the stock market experiences a 5% dip three times during the course of a year and typically has at least one decline of 10% or more during a year. There are always potential reasons for uncertainty and volatility can occur at any time. One of the keys to successful long-term investing is to not let the noise in the markets alter your long-term investment strategy. Investors need to be able to look past short term uncertainty to see long term opportunities.
Looking ahead, our outlook remains constructive for quality stocks as we anticipate that above trend economic growth will continue, despite some of it being delayed. We are very cognizant of potential risks as well and, as always, we believe appropriate diversification is important, especially in times of potentially heightened volatility
Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Past performance is not indicative of future results. All indices are unmanaged, and investors cannot invest directly into an index. Diversification does not ensure against market risk.