All of the talk today has been about recession, as the spread (difference) between the 2-year US Treasury and the 10-year US Treasury is inverted (the former is greater than the latter), which has generally been a precursor for a recession.

What does that mean for long-term investors?  Nothing, really.  Whether or not we are heading into one, a recession happens every 3.2 years on average, and lasts an average of 1.5 years, so they are not an unusual occurrence. We will continue to rebalance our clients’ diversified accounts on a regular basis, and you should do the same if you are managing your own money, and this will help weather the storms.

On that note, while the market (the Dow Jones Industrial Average) fell 800 points today, which sounds like a lot (especially for those of us who remember when the Dow was in the 2000-3000 range, and many will remember when it was below 1000), it was a 3% decline; not small, but not even close to something groundbreaking.  For reference, the 9th largest percentage drop was on October 15, 2008, and the market fell 7.87% that day (after having risen over 11% only two days prior, which represented the 5th largest percentage gain ever).  Meanwhile, despite how bad the news will portray this, as of the close of business today the market is up over 13% year to date, over 30% for the last 3 years (about 9% annual average), and over 45% for the last 5 years (about 7.8% annual average).

So, while the last month has certainly been volatile (and I don’t think it’s over), we are still doing very well in the long-term. And that’s what it’s all about.

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