Today was the scariest day on Wall Street in years as Monday continued the decline from last week.

For the week ending Friday, Stocks recorded their first weekly loss of the young year, with the large-cap S&P 500 index suffering its worst weekly drop in two years.  All major markets finished the week in the red with the Dow Jones Industrial Average falling -4.1% to close at 25,520.

Today we are reminded that the investment markets can be volatile as the selling in the United States continued around the globe as Asian and European markets declined on Monday as well and then accelerated Monday in the United States.

There was no clear-cut catalyst for the decline, which came as the long-running rally fueled by improving corporate earnings and strengthening U.S. and global economic growth accelerated in January.

Amplifying the selling were computer-programmed trades set to dump shares at certain levels. According to traders, the Dow was set to trigger trades once it fell below 25,000 and 24,000, for example, and 2,700 for the S&P 500.

Tonight, the news feed will use the scary lead saying.

“The Dow tumbled 1,175 points, marking its worst one-day point decline in history”

The drop amounted to 4.6% today — the biggest decline since August 2011, during the European debt crisis. But it was nowhere close to the destruction on Black Monday in 1987 or the financial crisis of 2008.  Taken with last week, the gains of 2018 have all but been eliminated.

Today the sense of safety disappeared as the stock market encountered its first genuine bout of turbulence in years.  This sudden stock-market carnage on Wall Street shattered what has been a protracted period of low volatility and a mostly uninterrupted climb toward the moon for stocks.

This has been one of the most peaceful environments for equity returns in history.  That doesn’t, however, mean that risk was eradicated.  Risk is always present in markets.  What is visible in a chart, however, is return, not the environment under which those returns were generated.

We all knew volatility was going to make a comeback at some point.  It has.

“What do I do now” is a question that I am sure is on your mind.

Tonight, we will review the results of our technical based approach and take appropriate action in your account as needed.

Our tactical information-based approach eliminates the emotion that comes with a quick violent change as seen over the last seven days.

Want to know more about your account?

Go to our website and schedule a phone call with myself, Will or Tina by clicking on SCHEDULE TIME WITH ME (Bottom right corner)

Michael Tannery CPA, CDFA® AIF®

Registered Principal

Tannery & Company

Tax – Accounting – Wealth Management

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