The S&P 500 eked out a modest gain of 1.8% in the third quarter, as U.S. stocks held on to their biggest year-to-date gains in more than two decades.
Last year’s sell-off, however, still weighs on the 12-month returns for stocks. S&P 500 is up just 4.1% since September 30, 2018, and small-caps and foreign stocks are negative for this time period.
Some investors are wary of a repeat of last year when the stocks peaked in late September and then tumbled almost 20% over the next three months.
Proceed with caution
Caution may be warranted as reports show that global growth is deteriorating. The Federal Reserve cut interest rates for the second time this year in an attempt to extend the expansion in the face of economic weakness. Political uncertainties and trade disputes plague the global economy. Lack of clarity may remain a catalyst for volatility. Perhaps that’s why this year investors have favored safer assets like bonds alongside riskier stocks.
No one really knows how current concerns will be resolved and what that will mean for the markets. We do know that staying diversified and allocating to both stocks and bonds can help you position for a variety of outcomes. Quarter-end can be a good time to rebalance back to your target allocations, if necessary.
How to handle market worries
Worried that you’re invested in a way that you might regret if the market sours? Wondering if you’re taking too much or too little risk? Not sure if this is the time to make a change?
FundX advisors have helped hundreds of people answer these same questions and invest wisely and with confidence. Click here to set up a time to talk and let’s see if we can help you move forward.