Let me just start by saying that the stock market is always volatile. Volatility is a way to measure risk in the market, and there needs to be risk in order to have any type of additional return. Think of it this way, markets exist to facilitate buys and sells. If everyone always knew what the market was going to do, there would not be a buyer for your seller, or a seller for your buyer. Everyone would want to do the same thing and the market would disappear. Risk is just a reflection of not knowing what the market will do.
That being said, what the heck is going on in the market these days?!?! So far in October, the S&P 500 has fluctuated over 1% on 10 of the first 17 trading sessions. And since the closing high on September 18th, the market has dropped 7.4% to its low on October 15th, and then it rebounded 4.7% as of October 23rd.
So, what is causing all this volatility? What it boils down to is uncertainty. The market hates uncertainty. However, there is not just one cause for the heightened uncertainty we are currently experiencing. Here are just a few:
- Europe. Europe seems to be in a recession or heading quickly towards one. With growth slowing tremendously, even the plow horse German economy is showing weakness. This has caused the world to look to the ECB to infuse cash into the system and spur on growth. However, it so far has been less than convincing that it has the ability to do so.
- Ebola. With the first case of Ebola was diagnosed in the U.S., the panic took off. And, when the next two cases were announced, the media had us in a frenzy. Concern about economic loss was a real thing. The World Bank recently released a study that estimated the total cost of the Ebola outbreak in West Africa could reach $33 billion. Much of this is caused by the fear of the disease and when people stop doing normal everyday spending because they are scared to go out.
- Geopolitics. Tensions in the Middle East and in Ukraine can cause the market to be skittish. This has been with us for a while, but it always brings up the specter of a long drawn out conflict that costs us, and therefore our economy.
- The end of Quantitative Easing. At the end of this month (October), the Fed will meet and most likely announce that they will no longer be buying bonds. Now, while this is highly anticipated, this will be the end to the latest Fed intervention and leave us in a world where the Fed is not injecting money into the economy. It has been several years since this has happened. And even though the Fed has been reducing its bond purchases since last December, we are now entering the phase where the Fed will eventually raise interest rates. We don’t know when this will happen, and the timing of it could be crucial. Wait too long and we could have unexpected inflation. Too early and the economy could stall.
Add these situations to the normal market and economic uncertainty and you end up with one volatile market. So, what’s an investor to do? I’ve gotten this question quite a few times over the last month. No one knows what the market is going to do. The best way to have success in the markets is to create a portfolio that is appropriate for your risk tolerance and investment horizon. Monitor your plan and make adjustments based on your individual situation. I have always believed that long term investing and correct asset allocations are the best way to make money in the markets. And remember this: market corrections are a natural and healthy occurrence. A market correction is a pullback of 10-20%. Since the S&P500 was created in 1957, the market has corrected about every 18 months. Are we due for a correction? Probably. The last correction we had was in October of 2011. But if you’re invested for the long term and properly allocated, this should not be a concern.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.
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A Financial Advisor registered through CUSO Financial Services, L.P., Gavin has 25 years of experience as an advisor in the Puget Sound area.
“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship, I can really get a sense of what’s going to work best for them.”
Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.
So what is Gavin’s vision for his dream retirement?
“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”
When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football and taking weekend trips around the Northwest.
Gavin is registered to transact securities business in the states of AZ, CA, CO, FL, HI, ID, IL, KS, MN, NV, NY, OR, UT, VA and WA.
*Non-deposit investment products and services are offered through CUSO Financial Services, LP (“CUSO Financial”) (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CUSO Financial. Verity Credit Union has contracted with CUSO Financial to make non-deposit investment products and services available to credit union members. Atria Wealth Solutions, Inc. (“Atria”) is not a broker-dealer or Registered Investment Advisor and does not provide advice. CUSO Financial is a subsidiary of Atria.
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