After a quiet, steady and sometimes spectacular bull market in 2017, stock market volatility returned with a stomach-churning vengeance early in 2018, conjuring unpleasant memories of the major recession of a decade ago, and reminding investors just how important it is to take steps to protect their assets from the wild, unpredictable market swings that are all too common these days.
2017 went down as one of the least volatile years on record in the stock market. But the relative quiet ended abruptly in February 2018, when the S&P 500, a popular index that tracks stock market performance, recorded three drops of greater than two percent in the span of five days. Within a month, however, stocks had mostly recovered what they lost. After a blip, the bull market was back.
Short-lived as that blip was, it served notice to investors that staying true to certain investing fundamentals is the best defense against the vagaries of the stock market. “There’s a tendency to pay much closer attention when the stock market drops,” observes FPA member Molly Balunek, CFP® who heads Laurel Tree Advisors, a comprehensive financial planning firm in Cleveland, OH. “People say, ‘The market has been so volatile, what trades do we need to make?’”