A synopsis of recent market activity, a look ahead, and putting it all in perspective

After a seeing a significant spike in volatility, the 3rd quarter ended on a negative note with a broad market selloff and the S&P 500 index now posting negative -5.29% year to date return. Since the end of the third quarter which was on September 30th, the stock market overall has gone up in the three weeks since. However, it is still timely to take a look back, and put everything in perspective.

While market volatility is quite unsettling for most investors, it is important to understand that investing is based on the law of averages. In order to achieve market returns consistent with historical data, we must by definition be prepared to endure the inevitable short term market declines to extract the maximum benefit of long term gains. Each downturn leaves investors questioning whether or not they are witnessing some type of market anomaly not consistent with historical market data.

The S&P 500 index has been positive for 27 out of 35 years, and the average intra-year market decline since 1980 has been -14.2%. What this tells us is that market volatility and their corresponding corrections are quite the norm, yet still unpleasant when in the moment.

The most current economic data seems to indicate a significant risk of global recession led by the recent negative news about the Chinese economy. It is quite possible the market has been simply discounting this risk as opposed to concerns over the long anticipated interest rate increase by the Fed, which is still yet to occur. There have been both some recent positive and negative signs in recently released US economic data. The Consumer Confidence Index for September rose unexpectedly to the second highest level seen since the recession of 2008. Personal Consumption data also remained firm, demonstrating that the consumer is still active. However a disappointing Labor Force Participation report fell below expectations.

While we are not necessarily convinced the recent downturn is in fact complete, ultimately, forecast of short term economic changes remain irrelevant in the context of long term financial planning and wealth management. We have never subscribed to the notion that anyone can consistently time financial markets, as it is impractical to presume anyone can consistently predict the right time to enter and exit any asset class. There are simply far too many variables that affect market outcomes in the short term.

Major Market Indices

Below is a summary of Q3’15 performance of some of the major indices:

US Treasury 3 Month T-Bill: 0.01%

Barclay’s US Aggregate Bond Index: 1.23%

Barclay’s Municipal Bond Index: 1.65%

S&P 500 Index: -6.44%

Dow Jones Industrial Average: -6.98%

MSCI EAFE (International Equities): -10.23%

MSCI Emerging Markets: -17.90%

Russell Mid-Cap: -8.01%

Russell 2000 Index (Small-Cap Stocks): -11.92%

Bloomberg Commodity Index: 4.66%

Credit Suisse Long/Short Equity: -14.47%

Morningstar REIT Index: 3.09%

If you desire an appointment, have any questions on any of this material, or any other financial subjects may relate to your own financial circumstance, please reach out to us at the contact information below:

Sincerely,

Brian Cohen, CCO; email: brian@landmarkwealthmgmt.com; phone: 631-923-2487

Chris Congema, CFP®; email: chris@landmarkwealthmgmt.com; phone: 631-923-2486

Joe Favorito, CFP®; email: jfavorito@landmarkwealthmgmt.com; phone: 631-930-5336

Direct office email: info@landmarkwealthmgmt.com

Direct phone: 631-923-2485

Landmark Wealth Management, LLC (www.landmarkwealthmgmt.com). The firm is located at 900 Walt Whitman Road, Suite 208 in Melville.

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This communication is from Brian Cohen, Chris Congema, CFP®, and Joe Favorito, CFP®, financial advisors at Landmark Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisory firm. The information in this blog is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.