So, the S&P 500 closed low enough on Tuesday to make it 10% lower than its closing high on January 3rd marking, officially at least, a correction in the stock market.
If you aren’t seeing a lot of fuss, that’s because it really isn’t that big of a deal. Back on January 3rd, you couldn’t swing a dead cat without hitting someone who thought the market was overvalued, that it had run up too high for too long. So, when the market began a slow sideways, sloping down, trend over a two-month period, nobody really worried about it. It’s as if those prices on January 3rd weren’t real and the market was getting back to reality.
Even now, there are plenty of people out there saying that the market is still too high. They might be right, and frankly another two-month long drop down another 10 percent probably won’t be much of a fuss either. After all, while this correction is a market down 10 percent from its peak, it’s a market that is zero percent down from last October, and zero percent down since last July, and still very much up from before that.
In other words, unless you invested in the last six months, your portfolio isn’t even down. And, if you’ve dollar-cost averaged over the last six months, you are probably pretty much even, even though the market it down. In other words, everybody is fine. This 10% isn’t some sort of bloodbath for investors. In fact, the next 10% down only takes you back to March 2021 levels. Again, a few smooth drops like this are actually good for the markets.
Now, if the whole Ukraine thing becomes a big problem, or if something else comes out of left field for a whack at market stability, that might draw some attention.
As for investors, as always, a well-diversified portfolio tailored to your goals and risk tolerance is the right way to invest for everything. Once you have your retirement, your college, and your savings and spending are all fully funded, you can try some other investments. Right now, I’m doing what I always do, looking for sweet dividends from companies I like. Cheap tech dividends are out here for IBM, INTC, and some others. Also, if you’ve ever wanted into Pfizer, McDonalds, or Coke, you can get 2.5%+ dividends on those. Heck, you can get 1.64% dividend out of Walmart, for crying out loud.
The Author
By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. At the time of publication, Mr. Nelson owned shares in McDonalds, Coke, Pfizer, IBM and Intel, however, that may change at any time without notice.
ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.