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October Market Commentary

October 26, 2018

"The stock market is the only place where the customers don't buy when the merchandise goes on sale."
Alex Green

For many of you, therein lies the question; are stocks and bonds on sale? With the S&P 500 down approximately 8.8% for the month of October (as of 10/24/2018), it is unlikely that the month of October will end with strength. This episode is very reminiscent of the February sell-off, from earlier in the year. Although painful to watch, market corrections are necessary for a healthy long-term bull market. So, think of October as a spoon full of medicine.

With the ghost of market past hovering in the shadows, investors have been distracted by the normal noise of current events. When the markets disconnect from the basic fundamentals of the economy, often time, this is when the stock market is indeed on sale.

Investors can lose perspective and become disoriented when the markets are volatile. This is especially true in and around an election, as news coverage and political ads burrow deep into all that is perceived to be bad in America. With the glass half empty, you will look at a market correction as the next coming of the "Great Recession."

In America, the glass remains quite full. With record corporate earnings, low unemployment, and historically low-interest rates the odds favor that October will be a blip on the long-term chart of this bull market.

We can always find reasons to not invest (see chart below); the common phrase is a bull market climbs a "wall of worry" on its long journey to the ultimate top. History would suggest the current picture has played out hundreds of times.

Will the market continue to fall? Great question. The answer is Maybe. Nobody knows the short-term trend of a financial market, but what can be discerned is the fundamental growth of corporate earnings and the basic eye test of what is going on regarding the amount of economic development in the thousands of communities throughout the country.

With free and open markets, innovation and entrepreneurship will continue to drive future growth for the US economy. Most US companies reflect the vital optimism of future growth; responding quickly to the innovation developing daily. Here in October, many of those best companies in America have gone on sale. Prepare your shopping list now. Pick your price and average into this market.

As always, review your financial plan. We have many times seen clients believe the sky is falling; only to find that their plan remains right on track. Please give us a call with any questions or concerns or if you would like to review your plan.

Stock Market History
Source: Atalanta Sosnoff

Views expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Information provided is general in nature, and is not a complete statement of all information necessary for making and investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit loss. No investment strategy can guarantee success. The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index.

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