The Return of Market Volatility
As we approach back-to-school and election season, I'm reminded that volatility often returns to the market during these times. This past week, we experienced weaker economic data, a surprise increase in the unemployment rate, lackluster earnings, and an unwind in crowded positions. This led to a global selloff, disrupting what had been an otherwise calm year for the markets.
Stay Calm and Stay the Course
I understand that selloffs can be alarming in the moment. It's crucial, however, to step back and maintain composure. History shows that emotional reactions can have long-lasting negative effects on one's financial position. This underscores the importance of having a plan and preparing for various scenarios in advance. At Cornerstone, much of our time is spent doing just that, so we can act decisively on your behalf when market opportunities arise.
Insights from Our Market Outlook
Recently, we hosted our Third Quarter Market Outlook webinar, where we shared our perspectives on the market. If you missed it, I encourage you to watch the replay or read the transcript - Market Update Webinar.
Elevated Risks in the Equity Markets
From an investment perspective, stock markets don't look very attractive right now. Valuations are elevated, and earnings expectations are high, which doesn't align with our macroeconomic forecast of a slowdown. Investors have largely pushed their chips in, buoyed by euphoria surrounding AI. Because of this, we're considering repositioning on the equity side, taking some chips off the table in favor of bonds and alternative investments.
We strive to use our proprietary, data-driven investment process to remove emotions from investing, always focusing on helping you achieve your long-term investment objectives, regardless of the market’s short-term movements.
The Pillars of Our Investment Strategy: Diversification and Risk Management
Diversification and risk management are core tenets of our investment process. Learn more about Essential Risk Management Techniques and Tools to Protect and Grow your Wealth in our blog. The graphic below highlights our key portfolio takeaways:
As always, please feel free to reach out with any questions or discuss with your advisor what our risk management process means for your specific situation. You can also visit our website at cwgadvisors.com to find additional free resources or to schedule a consultation.
Thank you for taking the time to read my note.
Best regards,
Cliff Hodge, CFA
This material provided by Cornerstone Wealth Group is for informational purposes only. It is not intended to serve as personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment. Any securities mentioned herein are not to be taken as advice or recommendation to buy or sell a specific security. The information provided may not be applicable to your account managed by Cornerstone Wealth Group. Please contact Cornerstone Wealth Group for specific information regarding the holdings and trading activity of your account. Opinions expressed in this commentary do not represent a personalized recommendation of a particular investment strategy to you. Additionally, you should review and consider any recent market news. All expressions of opinion are subject to change without notice in reaction to shifting market or other conditions. Data provided is believed to be accurate, but its accuracy, completeness or reliability cannot be guaranteed.
Investment advisory services offered through Cornerstone Wealth Group, LLC dba Cornerstone Wealth, an SEC registered investment adviser. Custody and other brokerage services provided to clients of Cornerstone Wealth Group, LLC dba Cornerstone Wealth are offered by Fidelity Brokerage Services LLC, Member NYSE/SIPC and Charles Schwab & Co., Inc., Member FINRA/SIPC.
