The recent stock market volatility means investors are confused. One article I read stated it nicely:
“The stock market’s volatility stems from confusion as to whether the economy is too hot or too cold—and it is worried about the Fed response.”
–Bill DeShurko, CFP
Add to this confusion the most recent Chicago Fed report that shows that the economy picked up in September.
“Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.47 in September from –0.25 in August. Three of the four broad categories of indicators that make up the index made positive contributions to the index in September, and three of the four categories increased from August.”
So what’s an investor to do? On the one hand, there is the market drop in October with the return of volatility. And on the other hand, the economy seems to be doing fine in the recent months.
My answer: stay true to your investment approach. Do not change your asset allocation in response to short-term market fluctuations because if there is one thing we know for sure, the future is un-knowable.
Guessing which way the markets are going to move today or next week or next month is a loser’s game. Better to set a course and then stay with it during turbulent times. The ride may be rough some times, but you’re more likely to reach your destination by staying on course rather than veering off course when the wind rises and the seas broil. Stay the course my friends.