Published On: November 5, 2018

Written by: Ben Atwater and Matt Malick

  • October was the worst month for stocks in seven years.
  • It was also one of the ten worst Octobers for stocks ever.
  • However, bonds and dividends helped mitigate the damage.
  • In the chart below, you can see that large cap U.S. growth got hit the hardest, down 8.87% (green line), while the S&P 500 fell 7.28% (blue line), whereas select dividend paying stocks fell a relatively reasonable 4.14% (red line) and bonds basically held steady, shedding just 0.11% (orange line).
  • Although it was a miserable month, it’s been a long and profitable bull market and this one month is but a minor setback. That said, these kinds of months can happen at any time.  And we could see more bad months over the course of the next year.
  • We must embrace volatility and realize that investors can earn high returns in equities precisely because they are a volatile asset class.
  • Fundamental portfolio construction – owning high quality bonds and dividend paying stocks in a diversified and disciplined fashion – will become increasingly important if, as we expect, earnings growth peaks in 2018.
  • We will stick to our investment discipline through all markets. It’s the only option for success.

Please visit www.atwatermalick.com/ria for full disclosure materials related to recommendations contained in this update.

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