Political Stalemate in Washington DC.
The political stalemate in Washington DC over both federal government shutdown and federal debt limit related issues has the potential to cause significant volatility in stock and bond prices. A little perspective in stock price volatility may be helpful to those considering what to do with their portfolios. Refer to the chart of the S&P 500 as prepared by JP Morgan going back over 33 years and showing annual returns which were positive in 25 of those 33 years despite an average intra-year drop of 14.7%. Investors who have maintained their investment policy allocations, and rebalanced when appropriate, have prospered despite this volatility. We see the political dysfunction induced volatility as just one more time when discipline in portfolio management is the best prescribed medicine.
October 7, 2013
Authored by: T. Taylor Payne, CPA/PFS, CFP(r)
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