Sensible Perspectives

Responding to the Recent Stock Market Decline

Posted by on February 12, 2018

You may have heard that the stock market has been very volatile recently, with several days of significant declines. The drops in the US market on Monday, February 5th and Thursday, February 8th were especially large, around 4%, depending on the index. This followed a decline on February 2nd of a bit over 2%. To add a bit of interest, on February 5th the Dow Jones Industrial Average was down more than 1100 points, a record (February 8th’s decline was no slouch, over 1000 points). With some intervening increases, the US stock market was over 8% lower than it had been the week before.

International stock markets also declined.

The news media, both financial (such as the Wall Street Journal and Financial Times) and non-financial, such as the New York Times, NPR, and Fox News, talked about “plunges” in the market, and “extreme volatility.” Should you be worried? Should you do anything?

First, let’s place the news in context:

Second, let’s consider other economic news:

Finally, let’s consider your situation:

Large reductions in stock market values coupled with inflammatory language in the media can be very disconcerting.

A lifetime financial plan and a savings strategy and investment portfolio designed to accomplish that plan enable you to maintain your equilibrium when markets are turbulent.

Rick was also quoted on the subject in a recent article in the Christian Science Monitor.

Rick Miller is the founder of Sensible Financial Planning and Management. Got a question for Rick about the stock market? Ask in the comments section below, or get in touch with us via email.