The Dow Dropped, Do Not Drop out of Market

The Dow Dropped, Do Not Drop out of Market

February 09, 2018

**Financial Plans & Strategies, Inc. firmly believes that a well-diversified portfolio, long-term investing and regular meetings with your financial advisor is a good defense against financial downturns.**

Corrections happen. It has been so long since the last one (early 2016), many investors have forgotten the frequency with which they normally occur. Corrections can counteract irrational exuberance, and bring some rationality back into the market, which can be good for Wall Street’s collective health.

Fundamental economic data is still strong: as an example, the Institute for Supply Management’s service sector purchasing manager index just came in at 59.9 for January, a 13-year high. Just one of many recent strong indicators.

Pullbacks and corrections will always occur on Wall Street, and sometimes the bulls turn tail and run. It is part of the long-term story of the market. This Dow pullback was extraordinary in its four-digit depth, which was to be expected someday with the index above 26,000.

This is a moment in stock market history – and thankfully, not the norm in that long history, as any glance at stock market cycles will reveal.  At times like these it’s a good idea to avoid making hasty decisions, keep the long-term in perspective, and realize that corrections are part and parcel of stock market investing.