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Market Rebound: Navigating Recent Volatility with a Long-Term View
(MENAFN- Golin MENA) Dubai – UAE, Wednesday, 7 August 2024
After yesterday’s wild day, there is some good news in that markets seem to be finding a footing and settling down after a painful day of trade. The Nikkei is up around 7% today, the Australian market is flat, and US futures are up around 1%.
After one of the worst days in global markets since the pandemic, it's fair to say investors are going to feel uneasy. However, it's important to zoom out. Yesterday's fall for the Nasdaq, S&P500, and ASX on a 5-year chart is merely a blip. Pullbacks are uncomfortable for investors, but they happen and are simply the price of entry into the stock market. Sell-offs of this magnitude highlight the importance of not timing the market and using a simple strategy such as dollar cost averaging.
In our view, this bull market isn’t finished yet. If we look to the US, solid earnings growth is a reason to be positive. With most of the S&P 500 reporting, earnings are up 11.5% annually, the fastest since late 2021, and revenues have grown for 15 straight quarters. Strong economic growth also supports optimism. US GDP grew by 2.8% in the second quarter, continuing a trend of over 2% growth in seven of the last eight quarters.
In summary, yesterday’s moves may have been overdone. Volatility is par for the course with investing; it isn’t new, and it's been around forever. This isn’t a reason to panic, it’s instead a good time to review your portfolio, understand why you own your assets and keep your goals in mind.
After yesterday’s wild day, there is some good news in that markets seem to be finding a footing and settling down after a painful day of trade. The Nikkei is up around 7% today, the Australian market is flat, and US futures are up around 1%.
After one of the worst days in global markets since the pandemic, it's fair to say investors are going to feel uneasy. However, it's important to zoom out. Yesterday's fall for the Nasdaq, S&P500, and ASX on a 5-year chart is merely a blip. Pullbacks are uncomfortable for investors, but they happen and are simply the price of entry into the stock market. Sell-offs of this magnitude highlight the importance of not timing the market and using a simple strategy such as dollar cost averaging.
In our view, this bull market isn’t finished yet. If we look to the US, solid earnings growth is a reason to be positive. With most of the S&P 500 reporting, earnings are up 11.5% annually, the fastest since late 2021, and revenues have grown for 15 straight quarters. Strong economic growth also supports optimism. US GDP grew by 2.8% in the second quarter, continuing a trend of over 2% growth in seven of the last eight quarters.
In summary, yesterday’s moves may have been overdone. Volatility is par for the course with investing; it isn’t new, and it's been around forever. This isn’t a reason to panic, it’s instead a good time to review your portfolio, understand why you own your assets and keep your goals in mind.
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