Why Is the Stock Market Acting so Crazy?

Is it political? Is it interest rates, or is it the weather?!

While we have recently experienced high volatility, we have just come off of the longest period without a market downturn of 10 % or more. By the end of January of this year, the last six and a half years, have set a record for the longest period of relative market stability. The markets have been eerily quiet for longer than they ever have been before.

When we have experienced stability for so long, we can begin to think that this is the “new normal.” It was easy to forget that the stock market goes up AND down.
Stock market volatility is normal. Recent moves in the market can make us feel a little queasy, like riding a roller coaster at Hershey Park. We had a quick move up of 6.5% in January of this year, followed by a drop of 10% in 10 days in February. The market had additional large moves up and down since then. It is helpful to remember what Mark Brinser, a partner at our office, wrote in our last quarter’s newsletter“ historically, stock markets experience at least one 10% peak-to-trough drop per year”.

Yes, there are many interesting headlines about business and politics, and many of these can lead to market ups and downs. Besides the tweets that come out, there are other issues like tariffs/ protectionism and whether the federal reserve will raise interest rates three or four times this year. All of this can lead to uncertainty.

Going back to the roller coaster analogy, I have often told clients that the only people who get hurt riding a roller coaster are those who jump out while it is moving. While the ride might not be enjoyable, if you stay in the car, you will get back safely.