As we approach Halloween this week, it seems that global markets have gotten spooked by the perfect storm of economic chills.
A trifecta of issues has caused fear and selling in stock markets around the world:
1) Trade/Tariffs Issues
2) Rising Interest Rates
3) Upcoming Midterm Elections
Against this backdrop we have seen, for the second time this year, a drop of 10% or more in the US stock markets. It has been worse globally as international markets have suffered more than US markets during this time. We have seen slowing growth in China and Europe, and the rising dollar has caused market declines to be more pronounced globally. Through late October, international developed markets have lost nearly 15% year to date, while emerging markets have lost closer to 20% this year.
I am reminded that ten years ago, in October 2008, approximately one month after the failure of Lehman Brothers and AIG, Warren Buffett penned an op-ed to the New York Times. He stated that in the midst of the fear and economic downturn, which at that point had driven markets down more than 30%, he was looking at this as an opportunity to buy US stocks while prices were low. A link to that article, which is well worth reading, is included here.
Warren Buffett is one of the most admired yet least emulated investors in modern history. He has stated previously that it is relatively easy to make money in the market over time if you do the opposite of what most people do. He has stated that you should be fearful when others are greedy and be greedy when others are fearful. In his 2017 letter to shareholders he stated, "Every decade or so, dark clouds will fill the economic skies, and they will briefly rain cold. When downpours of that sort occur, it's imperative that we rush out doors carrying wash tubs, not teaspoons." For those clients who are still in the accumulation phase of life, you should look for opportunities to buy when prices are lower and take advantage of them. By and large, Americans love to buy things on sale. However, most do not apply that same thought process and wisdom to buying their financial assets.
We hope that in the midst of the recent news and volatility, taking a few minutes to review the steps that our investment committee has already taken will add some helpful perspective. Please read Mr. Buffet's thoughts from 2008. He provides insight and wisdom during a time that looked much more gloomy than what we are experiencing today. We trust that these thoughts will provide some perspective on what we are experiencing in the markets today. Please let us know if you have further questions about your particular situation. We are here to help you, our friends and clients. As always, we are anxious to "Move Life Forward" for all of us together.
**Investors cannot directly invest in indices. Past performance does not guarantee future results**