by Peter Wechsler
President & Co-Founder, Franklin Retirement Solutions
[email protected]
What a crazy 3 weeks in the market. The S&P 500 is now back to where it stood on Election Day. Market volatility has been the theme of the day, week, month, and year so far. It’s Wednesday morning and I’m at a conference in Puerto Vallarta as I write this column, watching the major indexes go from gains to losses and now back to a very nice gain, all in 2 hours. Whiplash has occurred so many times in the last few weeks that it’s starting to feel normal.
As I pen this column, the S&P is down 1% so far this year while the tech-heavy NASDAQ is down 4.4% year to date. If you look at the S&P as of February 15th, the index is down 5.3%. We’re nowhere near a correction but it’s nevertheless a significant drop for those watching the markets. Right now, the big concern seems to be the tariffs and it’s too soon to know how they will affect the markets.
On a positive note, it’s often been said that “as goes January, so goes the rest of the year”. With all three major stock indexes up in January, let’s hope this old adage works again. Remember 2022 when the S&P was off 20%? The S&P was down 5.2% in January 2022.
As investors, it’s also good to keep in mind that we have a 10% market correction more often than you might think. Between 2002 and 2021, the market fell 10% in 10 of 20 years with an average pullback of 15%. Yet, over the long term, we know markets have gone up.
One thing Rob, Kyle and I have noticed lately is that for many of our clients, the percentage of market risk in their portfolios has grown in the past few years with the strong markets in 2023 and 2024. As we’re meeting with clients, we are having discussions about the amount of safe money vs. money at risk in your portfolio and making sure this aligns with your risk comfort level and your risk profile. We have some good options for nice returns without market risk; check out Kyle’s column below for more information. If concerned about your amount of market risk and not on our calendar for a few months, call Dave at 215-657-9200 and he’ll get you scheduled.
In case you’re wondering, this “conference” is actually an hour from Puerto Vallarta on the beach coast of Punta Mita. The resort is beautiful, but the views of the Pacific are breathtaking. I can’t say being with 100 other financial advisors is super exciting, but the one thing I’ve noticed is that with all the market volatility (and all the alcohol), I have not heard or been part of one discussion about market concerns. Not sure if this is good or bad, but I’m keeping my trap shut.
Hopefully easy flights back on Saturday…
Peter