Market Commentary February 2018

Last week the Dow Jones fell 665 points to end the day down more than 2.5% and falling below 26,000, the record level it hit on 17th January. It was the first time since June 2016 that the Dow had fallen more than 500 points. This is certainly bringing edgier conditions to the market than investors have grown accustomed to. We do not though see this as the start of a bear market. Indeed, the fall was largely due to fears of rising interest rates caused by great jobs data. And historically, 1% falls in the S&P 500 after such extended periods of calm markets have seen the stock market rise on average 7.2% six months later and 17% twelve months later. We are of the view that this is merely a short-term consolidation and one more trick of the bull market to force you to believe that the bull market might be over. That is not the case; the secular bull market should continue to climb the wall of worry.