Because of recent market volatility – several hundred-point swings throughout the day – we wanted to personally remind you of some of the core principles of investing. Now, as in the past, we all come through economic downturns and volatile markets by calmly assessing the situation, realizing there is always downside risk but staying true to our long-term plans. There is no cause for panic. Raymond James’ Chairman and CEO Tom James echoed these sentiments. Recently commenting on the current market, Tom said the current state of affairs “won’t be long-lasting. The real risk only happens if we slip into a serious recession” he said, adding that inflation is the real risk we’re facing now, something to watch closely if the Federal Reserve continues to cut interest rates.

The real risk only happens if we slip into a serious recession” he said, adding that inflation is the real risk we’re facing now, something to watch closely if the Federal Reserve continues to cut interest rates.

If you were paying close attention to the markets, you may have thought we were due for a correction last year, he said, but instead the market advanced. Now, the downside factors have coalesced into the dramatic volatility we’ve seen in January. Nevertheless, the real risk comes in layering consumer spending fragility on top of the other downside risks, Tom said. He added that if consumers stop buying, corporate earnings will decline, and a recession may ensue.

While he praised the Federal Reserve Board for doing a “reasonably good job,” Tom dismissed as a “political band-aid” the idea of a give-back stimulus. “It won’t turn the marketplace,” he said. Jeff Saut, Raymond James’ Chief Investment Strategist, agrees, suggesting that offering political solutions to “prevent the normal business cycle” is a bad idea.

Whether or not there is a recession won’t be answered for months, Jeff said. However, Tom suggested, there are opportunities at hand. “I’d be surprised if a year from now we’re not seeing a strong recovery for financial institutions” and some other market sectors, he said. Jeff believes the recent selling “stampede” is coming to an end as buying opportunities emerge.

Tom James had a practical suggestion for investors right now. Use this reminder that the markets are not always on a smooth ride to review your status, your goals and the asset allocations in your portfolio. While some downside risk remains, “we’re not really overpriced in the longer sense of general market levels,” he said.

Are these interesting times? Certainly. But the experts at Raymond James and I believe that our fundamentals – including our long-term, disciplined focus – should remain constant. That said, if you would like to review your portfolio or have questions, don’t hesitate to call our Raymond James Financial Advisors at UNFCU. We always look forward to hearing from you.