Volatility is Back

"It will fluctuate." - J.P. Morgan, when asked what the market will do.

Although many have forgotten what market fluctuations are like, the past four days have reminded us that volatility is normal.   No market goes straight up forever. 

Does the recent volatility mark the end of the bull market?   At this point, I don't think so.   The economy is doing pretty well and bear markets typically don't begin unless a recession is imminent.   Could there be a correction of 10% or more?   Yes, probably but not for certain.  Could it last a while?   I think a couple months will be likely since that will cause sufficient investing pain.

 For me, this is a good time to add funds back into the market.   Stocks and ETFs I like are going on sale, and likely to get cheaper.   So I am buying.   Of course, it make take several months or years to recover, but I won't need the principal for at least a decade.   In addition, I am buying stocks that have good dividends that are growing, to create a sustainable paycheck for the future.

There is a small chance that I am wrong... that this is the beginning of a major crash/collapse from which there is no recovery.  But history has shown that has never been the case and the market has always gone to new highs.   So I'm sticking with the event that has a 99.99999% probability of happening.

For more on The Practice of Personal Finance , check back Wednesdays  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

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