In 2017, the S&P500 Index rose over 20%.
- Since 12/31/2012, the index has risen from 1,426 to 2,673 on 12/31/2017 1.
- When you factor in dividends, the growth on the S&P500 over that five-year period was close to 100%.
2018 had also seen strong upward movement in the S&P500 until the last week in September when volatility jumped significantly.
- As we write this (11:15 a.m. on 10/25/18), the index is at 2,697 2.
- That reduces this year’s gains on the S&P500 to about +2% when you factor in dividends.
Whenever this type of downward movement occurs, it is easy, as an investor, to worry.
- While concern is understandable, economic fundamentals continue to be solid.
- S. GDP, wages, corporate earnings and revenues are all up while unemployment and taxes are down.
- That said, concerns about trade wars, rising interest rates, and the mid-term election political noise can be unsettling.
While we believe that economic fundamentals are still strong and that long-term prospects for the markets are still good, this does not rule out some ongoing volatility in the interim.
Since 2000, our approach at PPC has been to segment client assets into what we refer to as “Time Buckets”.
- In general, the shorter the time frame is for someone to need access to their funds, the more conservative those assets are positioned.
- The longer the time frame before needing access to the money, the more we shift assets into growth areas such as U.S. and global stocks.
- It is not unusual for clients to have some of their money in conservative holdings, and some in more growth-focused holdings depending on the time frame associated with each “bucket”.
If the current volatility has you worried, let’s schedule a time to either meet here in the office, or talk at length on the phone. We look forward to talking to you.
Have a great rest of the day and week!
Ken, Dave, & Todd
Sources: 1 — http://bigcharts.marketwatch.com/; 10/25/18
2 — https://www.msn.com/en-us/money?ocid=U452DHP; 10/25/18