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Clarks Green, PA 18411
Long Term Investors: Stay the Course - For At Least an Hour and a Half

Long Term Investors: Stay the Course - For At Least an Hour and a Half

December 27, 2018
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Last night, I wrote to clients and investors to explain our views on how Wall Street and Main Street are a tale of two different markets and how the resultant, mushrooming volatility is tossing stocks around like ragdolls.  I try not to bombard our clients with too many emails, but wanted to put the numbers into perspective and remind everybody as to why staying disciplined is the only real plan to follow during all the chaos.

Let’s take a look at the last three trading days in the Dow Jones Industrial Average:

On Christmas Eve, after the morning bell, the Dow opened at its high for the day and then swooned a total of 653 points to finish down 2.91% at 21,792.  Definitely no Santa Claus rally here…

After the Christmas holiday, on 12/26 it felt like we were in a different world.  Following a shaky open, the Dow moved over 1,166 points to finish a bewildering and record-setting 1,086-point gain up 4.98% to 22,878.  Santa, you’re late!

Today (12/27), it was “bah humbug” again as the Dow gave back nearly 60% of yesterday’s big move and sat at 22,267 at 2:30 this afternoon – a loss of 611 points.  And then things changed.  Within an hour and a half, the bulls were on the run and the Dow charged an eye-popping 872 points finishing up 260 points or 1.14% closing at 23,138. 

All in one and one half hour’s-time. 

Last night I mentioned that the 1,000+ point gain on the Dow may well have marked the beginning of a bottoming process and today’s action supports that notion.  Investors that got spooked out of stocks today at 2:29 PM lost their heads and missed a massive 3.8% bounce and a plus-side finish for the day.

The volatility is unprecedented and the machines are short circuiting.  Remember, that we invest for years and panic is not a plan.  If you’ve invested responsibly and have proper diversification, you don’t need to get shaken out.  Focusing on long-term success is what’s most important – even if long-term is only an hour and a half.

(The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.)