Over the past few days, you’ve likely been bombarded with news of the latest market downturn. By Monday, August 5, the S&P 500 had fallen more than 8% from its all-time high in mid-July—putting it a little bit shy of correction territory. By Tuesday, August 6, the market had already staged an uptick. And by the time you’re reading this, it may have reversed course again.
Since we haven’t seen as much market volatility recently, this one may have left you feeling a bit shaken. Why here? Why now?
To be blunt, we don’t know for sure. Some investors might be worried the U.S. economy has weakened based on news of rising unemployment. Maybe it’s because the Federal Reserve didn’t cut interest rates last week, as many investors had hoped—a move that can sometimes boost corporate profits. Or maybe it’s fears of a U.S. recession or an uncertain election year.
If we look for them, we can always find reasons the markets might have taken a turn for better or worse. Unfortunately, there’s no way to know in advance. But the good news is we don’t need to know. Instead, we know this: Markets have always climbed upward eventually.
This is a far more important message to bear in mind—and a comforting one for evidence-based investors like us.
So, what’s the best course of action? Sit tight, and let your long-term financial plan continue to work for you. Instead of worrying about interest rates, the job market and strength of the U.S. dollar, consider focusing on enjoying the last few weeks of summer. Catch up on beach reads, barbecue in the backyard or simply relax by your favorite body of water. Read the daily financial news if you’d like—and let us know if we can answer any questions you may have. But remember, the long-term planning we’ve done in the past means you’re not required to keep up with it all, if you’d rather spend your time elsewhere.