Our thoughts on recent market events

Volatility certainly came back in force.

As an investor, you should expect more bumps in the road than you’ve seen the last few years. That’s not necessarily a bad thing.

But it’s important to understand that even though market volatility is picking up, there are still strong fundamentals in the overall economy.

  • In the U.S., this bout of volatility happened when about 80% of the S&P 500 companies who recently reported earnings beat their estimates.
  • The global economy is equally positive, with growing industrial production, accommodative financial conditions, and strong global demand.

What this means for investments

The uptick in volatility doesn’t change our commitment to you at Principal. But as an investor, you should expect a rougher road than the one you’ve traveled the past two years.

Here’s our current thoughts:

  • Volatility may bring opportunity. (If the markets dip, you can potentially buy more with your money.)
  • The current retreat is not likely the beginning of a bear market, but a necessary correction after a period of unprecedented calm.
  • As inflation moves closer to the Fed’s target, monetary policy is likely to become less predictable…and returns more volatile.
  • It may be beneficial to have broad diversification* in your portfolio as volatility returns.

Other articles related to market volatility:

Short and sharp: Five lessons from the market sell-off

Bouts of volatility like the one we have just seen will severely test investors’ resolve. Here are five lessons to keep in mind.

Principal Global Perspectives - Market volatility

Takeaways and insights on market volatility from the boutiques and investment experts of Principal Global Investors.

Volatility: 3 Ways to Stay Calm When the Market Is Not

Get tips for keeping a cool head and staying on track with your plan for retirement when markets are volatile.

* Diversification does not guarantee profit or protection from loss

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