Dear Towerpoint,

As most of you are probably aware, the stock market took another a tumble yesterday, amid fears surrounding global growth, rising interest rates, inflation, and trade disputes. And while there are signs of a slight recovery so far early this morning, how the market opens is rarely how it closes. However, while it has been some time since we experienced one, and while they are anything but enjoyable when they occur, market pullbacks are dead common:

On the surface, yesterday's 831 point decline on the Dow was scary and unsettling for even the most experienced investor, as it represented the third largest one-day point drop in its history:

Research the all-time biggest gains and losses of the Dow and the S&P 500 HERE.

However, as the Dow has risen relatively steadily over the past several decades, larger point drops translate into smaller percentage drops, and in percentage terms, while the Dow had a very bad day yesterday, it was hardly historic. Please take a moment to read the Why Daily Point Drops in the Markets Shouldn't Worry Investors article below for additional color.

What is certain - the media absolutely LOVES when days like yesterday occur. A fear-evoking event like an 800+ point drop in the Dow provides a perfect platform for the many "talking heads" to chatter away and make bold predictions, and the general opportunity for media outlets to manufacture BIG eye-grabbing headlines. While we do not minimize the importance of what has happened over the past few trading days, we encourage you to not let the financial news (read: entertainment business) spook nor influence how you make decisions.

In summary and as mentioned above, a mix of higher interest rates, inflation concerns, and growth worries, along with several statements from President Trump that referenced a long-awaited "correction" and said that the "Fed is going loco" by raising interest rates, have all contributed to this pullback. However, it is important to maintain perspective by keeping in mind the markets have been on a historic climb, as the Dow & S&P have notched many new highs over just the past few years. The U.S. economy is very strong right now, and concurrently, corporate earnings are as well. The Federal Reserve (the "Fed") will continue to increase interest rates at a measured and telegraphed pace, which in our opinion is a very good sign our economy is able to stand on its own two feet.

What to do:

  1. If you are a disciplined investor who has a solid plan and strategy, it is advisable to remain objective and continue to be disciplined.
  2. If you do not have a plan and strategy, use this as an inflection point to begin developing one.
  3. Review the Money Market Fund Yields Have Been Leading the Pack illustration below, and double-check the interest rate(s) you are receiving on your savings or money market account at the local bank or credit union.
  4. Recognize and accept that the pace of growth of a properly diversified investment portfolio usually occurs in a three steps forward, two steps back fashion.
  5. Bear in mind Warren Buffett's outlook:

The world remains a complicated place, and we encourage you to call (916-405-9140), email (, or Tweet (@twrpointwealth) with any concerns, questions, or needs you have. We continue to be here for you, and look forward to connecting with, helping, and being a direct, fully independent, and no-strings-attached expert financial resource for each of you.

- Joseph, Jonathan, and the entire Towerpoint Wealth team

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