With the 24-hour news cycle, all of you probably are aware of some increased volatility in stocks after a quiet summer. It seems that October always brings such events and mostly on the downside. The chart attached shows how subdued volatility has been over the last couple of years. It also shows that it has been a few years without a meaningful correction in stocks. We are due for a correction in stocks which is typically defined as down over ten percent.
Is this it? We really don’t know and no one else does either. So far, the Dow Jones Industrials are down a little over 5.5% from their recent highs so if it does become a correction, we have some more days like this to go. While 200 and 300 points on the Dow seems like a big number and would have been a market crash in 1987, today it is less than two percent.
This pullback also has made some companies we have on our target list attractive buys in our opinion. So, we plan to stay focused on buying high quality companies at a discount to their intrinsic value rather than trying to time the market.
Please do not hesitate to contact us if you have any questions.