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Market Volatility and Sleeping at Night

The news reported that The Dow Jones Industrial Average “plunged’ 178 points yesterday. Should I be worried; should I change my 401(k) investments?

Before you overreact and do damage to your asset allocation, consider the following:

  • The normal volatility for this stock market benchmark for the last century has been 0.67% daily.

  • On 5.1.19, this average was 26,590. A movement, up or down, of 178 points is a normal day for the Dow.

  • Back on 1.1.99 the Dow was at 9,359, so a normal day’s movement would have been 63 points.

  • Do not focus on the points gained or lost in an average, or the dollars gained or lost in your account. Always focus on the percentage change.

  • A volatile day for the Dow is a movement of 1% of more. This happened 10 times in 2017 and 69 times in 2018. In some years, the stock market experiences much more volatility, depending on economics and world events.

  • The job of the news media is the scare you into not changing the channel. They do not help you manage your investments. Helping you distinguish between the daily market “noise” you should ignore and longer-term trends to react to is my job.

If the stock market is keeping you up at night, you may want to give me a call or send an email. Remember that you do not have to wait for my next visit to get some help. Sleep well!

Dennis P. Lynch

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