I hope you are doing well. I want to take a moment to address the current market conditions and remind you that while market downturns can be uncomfortable, they are not uncommon. Enclosed is a slide from JP Morgan’s “Guide to the Markets” that illustrates 40 years of intra-year declines relative to the S&P 500’s year-end closing levels. We have experienced these cycles before, and history shows that although they are challenging, they do not last forever.
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Financial markets do not like uncertainty, and the market is currently trading lower due to a mix of factors, including economic uncertainty, adjustments in monetary policy, and global events. However, it is important to recognize that market declines are part of the normal ebb and flow of investing. While the events driving the market lower may appear unique, I ask: Is it truly different? In our discussions, we have acknowledged the discomfort that these occurrences can create. I have heard many consumers say, “This time is different.” Yet, the end result of these events—and many others not listed below—has consistently been a market that rises over time. Consider a few recent examples: • 2024: From April through May, the S&P 500 declined due to conflicts in the Middle East, supply chain disruptions, and a resurgence of inflation. • 2023: From August through October, the S&P 500 fell as surging bond yields, prolonged rate expectations from the Fed, high inflation, and geopolitical risks took their toll. • 2023: Following Fitch’s U.S. credit downgrade in August, the S&P 500 declined amid discussions on the debt ceiling and fiscal uncertainty. • 2023: In March, concerns over Silicon Valley Bank led to a drop in the S&P 500, driven by fears over bank liquidity and potential runs on FDIC insurance. • 2022: In September, the S&P 500 declined because of rising recession fears, soaring bond yields, and Fed messaging. • 2022: From January through June, the S&P 500 fell amid the impact of the Russia-Ukraine war, persistent inflation, and rising commodity prices.
I understand your emotions during these times. Please stay the course and trust in the long-term strategy we have established together Please call the office if you have any questions or need further clarification. *Footnote- https://www.slickcharts.com/sp500/returns *Footnote- JP Morgan Guide to the Markets |
