Different Makes a Difference

Sometimes the market’s mood turns foul without good reason. We think we are at one of those junctures, and believe that it would be a mistake to overreact to recent market gyrations.

North American stock markets had a tough day, following a noteworthy decline on Friday. Overseas markets are following suit tonight. Unfortunately, corrections can sometimes be self-feeding in the short run as crowd sentiment shifts. Given that investor sentiment indicators were elevated following a long period of low volatility, we are bracing for the possibility of more downside before the market stabilizes. Nonetheless, we don’t believe there is reason to panic and alter investment plans. In our view, the latest market action is not the beginning of a bear market. Rather, we see the recent decline as a healthy and normal pull-back following an extraordinary run.