Hibernation Over: Does August’s Volatility Mark the Start of a Bear Market?

Bear Market

For more than a decade, investors have enjoyed the longest bull market in history.

It started in March 2009 as a recovery from the 2008 financial crisis. Since then, the financial markets have produced a slow and steady upward march, resulting in a 334% cumulative gain for the S&P 500.1

However, recent market volatility has some wondering if a bear market is upon us. On August 14, 2019, the Dow Jones Industrial Average (DJIA) lost nearly 800 points. That decline left the DJIA nearly 8% below its high in mid-July.2

The financial markets are facing challenges on several fronts. President Trump announced additional tariffs on nearly $300 billion worth of goods imported from China. While he later delayed the implementation of the tariffs, the Chinese government announced that they would retaliate.2

The bond market has also flashed signs of a potential recession. Also, on August 14, the yield for the 10-year Treasury briefly dipped below the two-year Treasury yield. This rate inversion has historically been a reliable indicator of a market downturn and even a recession.2

Given the recent volatility and the volume of negative news, you may be fielding calls from nervous clients. While you can offer the traditional advice to stay the course and focus on the long-term, that advice may not be sufficient for your most risk-averse clients.

It’s impossible to predict the future of the financial markets, but you can take steps to prepare your clients and plan ahead. Now could be the time to recommend vehicles like deferred annuities to reduce your clients’ market risk.  

Contact CreativeOne today at 800.992.2642 to discuss options for your client’s portfolio.  

1https://www.cnn.com/2019/04/23/investing/bull-market-history/index.html

2https://www.cnbc.com/2019/08/14/dow-futures-fall-50-points-at-open-as-sell-off-triggered-by-bond-recession-signal-drags-on.html

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