Looking at market corrections and inter-year market fluctuations with Wealth E&P
October 4, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week.
I want to catch you up on how things went last week in the markets and what we're seeing for this week. Of course, last week the markets did not get off to a great start. All three major indices were down pretty significantly – with the DOW down about 1.3% and NASDAQ down all the way at 3.2%. The markets have not started out so hot this Monday morning, either.
I want to give you some perspective on how, historically, it’s not abnormal at all to see pretty significant downturns in the market that end up positive for the year.
This goes all the way back to 1980, and we can see some data by looking at the S&P 500. The bottom part is the downturn intra-year, and the top is where it finished at the end of the year. You can see lots of examples, but I'm going to point out 2003 for some perspective. The market was down 14% intra-year, yet finished the year up 26%.
So, just keep in mind that these corrections are actually very normal and healthy for the market; they tend to happen two to four times a year. However, we've got to watch very carefully to see if it turns into a crash, in which we'd have to make a major adjustment.
So far, we are seeing some subtle adjustments. Wealth E&P’s Economic Model did have a downturn in its score today, going from the 80s and 90s (over the last year) down to 57.4. So, we did de-risk a bit for that.
Our other indicators are all still very positive, although we’re also seeing some subtle shifts. We will keep watching that every single day and make adjustments as needed. In the meantime, we hope this is a short-term correction and that we see a quick bounce back to recovery.
If you have any other questions for us, if you want a risk profile, or if you would like a retirement projection, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute next week!
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