DALLAS — GuideStone has produced a video outlining the nation’s current market volatility and responses that long-term investors should consider, including remaining calm in the face of daily news, keeping a long-term focus on investments and maintaining diversification in age- and risk-appropriate investments.
David S. Spika, CFA, global investment strategist for GuideStone Capital Management, LLC, narrates the video. Spika has been called on in recent days to discuss market volatility in a variety of news outlets, including cable business channel CNBC and industry news source InvestmentNews.
Spika noted in the video that stock market declines and rebounds are virtually impossible to time, even for professionals, and should never be the reason for long-term investment allocation changes.
“Here at GuideStone, we’ve been confident that market volatility would rise because the market was much too calm and investors were way too complacent,” Spika explained on the video. “But we sure couldn’t predict the timing of the next correction.”
While breathless headlines in the media may trigger memories of the 2008 market drop and recession, Spika said the reality is that markets are constantly going through periods of correction and rally.
“It’s also important to be aware that big down days in the market are frequently followed by powerful rallies,” he said. “Since 1945, there have been 100 declines in the S&P 500® of between 5% and 20%. On average, these declines have lasted only four months, and the market has recovered all of the loss quickly, within an average of one to three months.
“We believe that what is happening now is simply a needed short-term correction and not the beginning of a bear market.”
Bear markets are declines in the market exceeding 20% that last for a year or more and almost always occur in conjunction with an economic recession. Spika said that GuideStone does not currently see any signs of a coming recession and is encouraged by current economic data.
GuideStone Capital Management makes available this and several other videos, articles and links on current news topics related to the markets on its website, GuideStoneFunds.com.