Recent Market Volatility
There is no doubt that the market activities of Thursday (05/06/2010) rattled the nerves of investors. The cause of the severe volatility is still being investigated, but the initial reaction is that several factors may have contributed to the brief market drop. Initial reports claimed that an error made by a trader started the downward spiral which was then magnified by computer based trading systems. Other reports claim that uncertainty over Greece and the future of the European Union caused the market to become overly sensitive which triggered the electronic trading systems to take drastic actions. The SEC has launched a probe to determine the exact cause of the volatility. Once the investigation has been completed the results will be made public.
This uncertainty is likely to keep equities markets unsettled in the short term as the EU takes stabilizing measures. While this may lead to an increase in volatility, we maintain an optimistic view of the market moving forward and recognize that temporary market pullbacks and corrections are a normal part of any market recovery.
At Smart401k we continue to stress the long-term approach to investing. Our ongoing review and analysis of market fundamentals leads us to believe that there are continued opportunities for growth going forward. Reacting to volatility by moving your assets to cash or bonds is an attempt at market timing, which often works to the disadvantage of the individual investor and is not recommended. If these market actions did cause you to panic, it may be a good time to review the level of risk in your portfolio to ensure that you are invested appropriately given your investment objectives.
If you have any questions or concerns about the recent market events, or about your retirement accounts, please feel free to call our team of investment advisers at 877-627-8401.
About Smart401k
Smart401k is a Web-based investment adviser providing unbiased advice to help employees invest with confidence in their employer-sponsored retirement plans. Individuals receive personalized investment recommendations based on the funds in their plan and support of professional investment advisers available to answer all investment questions. Based in Overland Park, KS, Smart401k can be found at www.smart401k.com.
