2022 has been one of the worst starts to a year ever for stocks, but should investors be worried or even surprised? In the latest LPL Street View, Ryan Detrick discusses why volatility is normal and why investors need to prepare for it.
Ryan notes that even in up years, stocks pullback 11% on average, and given the big rally over the past few years, maybe this early 2022 volatility shouldn’t be a surprise. In fact, the S&P 500 Index hasn’t had a 10% correction in nearly two years, again, suggesting some volatility is perfectly normal. Then adding in the fact the Fed is about to start hiking rates, the aging economic cycle, and it is a midterm year (the most volatile of the 4-year cycle), investors should be buckling up their seats belts, as volatility could continue. But the underlying fundamentals of the economy remain quite strong, led by a healthy consumer and strong corporate earnings backdrop. Suggesting any weakness will likely be an opportunity for longer-term investors.
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All index data is from FactSet.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
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