The markets have started the year in full sell mode. Today, the equity markets will continue their slide. The weakness in oil combined with some major problems in economic growth in China has pushed markets lower. While we haven’t seen this kind of precipitous drop since the beginning of the financial crisis, this is not a time for panic nor a time to start selling. Market’s do as they always do and that is price in future expectations. Just before the holidays, we reiterated that the market valuation could not be sustained. This will stabilize shortly and may even present an opportunity to add to the equity markets when the S&P trades at 15 times earnings or in the 1900 range. One caveat that cannot be quantified is market perception, we would not want to see the market go below the August low of 1867. With the Fed slowly taking away its unprecedented accommodation policy, fundamental investing will take root again!
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