- 5.8% drop in the S&P 500 indicates the possibility of a rough ride during the year, but a positive result expected by year-end.
- We believe that global economic fundamentals remain largely positive.
Should a sharp pullback from the peak in the U.S. stock market be viewed as an unexpected event? The answer is no. Despite its swiftness, long-term equity investors should be well-acquainted with this kind of volatility. What is unusual about the market’s behavior is the length of time that has passed since the last dip of 10% or more, which occurred back in the third quarter of 2011. Part of the price of enjoying the competitive returns of equity investments over the long term is to endure the occasional bouts of stomach-turning declines. To settle their stomachs, investors use high-quality bonds in varying quantities as the Pepto-Bismol of their portfolios.
Bruce Simon, CFA, Chief Investment Officer, City National Rochdale
City National Rochdale is outside of and separate from our relationship with First Allied Securities.