Episode 159: What’s Behind the January Stock Market Swoon?
Today’s Prep:
Feeling a bit whiplashed from the stock market volatility? David discusses what just happened with the stock market and what we can do as we look toward the future.
Equipping Points:
Lately, we’ve been seeing some volatility in the stock market. There was a swoon in the market coming into January with all-time highs to now what feels like a punch in the gut. So, what happened? And where do we go from here?
This past summer we talked about inflation. You want to have low and steady inflation. This past year though, inflation has been more persistent than most people expected. We also have rising geopolitical risk with Russia and Ukraine, which causes uncertainty. Even though we’re two years into the pandemic, there are still COVID lockdowns in parts of the world. Finally, there is uncertainty surrounding what the Fed is likely to do. Some things may drop with inflation while others will continue to rise.
Would this be considered a market correction? As a general rule, it does seem like a correction right now. David says the biggest correction has been in growth stocks and discusses different companies that have been more steady. Corrections only matter if they turn into bear markets, which are when you’re more than 20 percent down from an all-time high. The volatility that accompanies all corrections may make us do emotional things with our money and result in bad decisions.
Everybody knows that nobody really knows, but where do we go from here? David says to start by being unemotional about the money you have in the market. We need to watch what the Fed is actually doing. Make sure that the portfolio you have right now aligns with your retirement goals. This is a good time to do a check-up on your emotions, your portfolio, and your retirement goals.
Listen to the entire episode or skip ahead using the timestamps below to get a better handle of what’s been going on with the market lately.
0:27 - This week’s Chiefs game was a shock.
1:30 - We’ve been seeing volatility in the stock market.
3:53 - What happened?
8:32 - Are the markets in a correction?
11:52 - Do corrections matter?
15:29 - Where do we go from here?
Today’s Takeaway:
“The thing that really matters about a correction is the volatility that accompanies all corrections."
– David Dickens
KC Financial Advisors Blog


