Interpreting Stock Market Volatility

Monday, February 29, 2016 | Leave a comment

Life Notes Financial Health article by Brent J. Welch, CFP®, ChFC, CRPS®, CLU, AIF®

At the end of August 2015, we had the worst stock market drop in four years. It’s been a while since we have seen a 10% correction and it didn’t feel so good; Did it? Fortunately, after the correction the institutional market program traders decided it was a buying opportunity and they moved in with millions of shares of purchasing to drive the market back up.

As we interpret the stock market volatility and compare it to the downturn in 2011 and 2009 we see a significant difference. The difference is not in the chart above, the difference is in the economic news surrounding the markets.

In 2009, we had a bear market that was sustained through deep-rooted fears. These fears included the collapse of the banking system in America, the collapse of Bear Stearns, the economic future of corporations such as General Motors that were on the brink of disaster. Municipalities, state governments and the federal government were all in jeopardy. Congress could not decide what to do.

In 2011, there was also a banking crisis in Europe, not America. One of the worst pieces of news was that the US government almost defaulted on government bonds. Congress stepped in and corrected the course. By borrowing yet more money, they saved the day. Or did they?

Almost every year in recent history, we borrowed more than $1 trillion. This mounting debt is going to be daunting to the economic future of America. This new economy is based on the perceived value of the dollar, otherwise known as Fiat currency. Because there is no gold standard anymore, the standard becomes the gross domestic product or GDP of each nation as interpreted by accountants, balance sheets and income statements. This mounting debt does create severe problems for the economy.

So how do we interpret the stock market moves, the current economy, and the history of the seven-year cycle? Well, I believe we should pay attention to all of this news. As I said in my September 2015 monthly market message, I believe that the late August correction was a shot across the bow. I don’t believe this was the big downturn, but I think one is coming soon.

Welshire is actively looking for ways to protect your money. By using a diversification of Asset Lock technology, fixed indexed annuities, variable annuities (investment seat belts and investment airbags), forms of guaranteed lifetime income, low-cost index strategies, dividend stocks and the Welshire Advance and Protect strategy, you may be better positioned to keep together what you worked so hard to put together. Please set up a review ASAP with your Welshire Retirement Wealth Advisor to help you work toward retiring with more confidence and peace. Please go to and review the article I wrote about the 8 Investment Strategies for Life. We can help guide you through these options and you can decide what is most suitable for you.

As Patrick Kelly said in his book, Stress-Free Retirement, “it wasn’t raining when Noah built the ark.” In other words, the best time for taking action is before the storm hits. Please contact Welshire at your convenience and schedule your investment review with Kristy, Josh or Jake.

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