Fear and Volatility: Stay Focused on Goals

If you're a fan of Warren Buffett, you'll recognize this quote: "Be fearful when others are greedy and greedy when others are fearful."

In recent weeks, oil prices have rallied higher, and the Fed indicated higher interest rates may be here for a while. There was uncertainty about lawmakers getting a budget passed, and now the passed budget has only delayed the possibility of a short-term government shutdown until November.

If you listen to market pundits, it sounds like it’s going from bad to worse.

As you can see from the accompanying chart "Is the Fed Done Raising Rates?", market participants are anticipating higher interest rates into early 2024 and don't expect a rate decrease until later in the year. 

But September is closed, and now we are in October–a month that has had its share of volatile moments over the years. It’s a seasonally weak period for stock prices, and that’s important to remember as stock prices churn a bit.

It is easy during uncertain times to wonder whether it is worth watching your stocks or if it would be better to set your statements aside for the time being. 

As you can see from the accompanying chart "Fear is a Powerful Emotion", fear—almost extreme fear—has become the driving force for investment decisions as the Fed talks tough about "higher for longer" with interest rates and the price of oil flirts with $100 a barrel.

So, is it time to be fearful, or are the markets just moving through another cycle? That's difficult to determine, but you don't have to look very far if you're looking for reasons to be scared.

A recent CNBC survey of 300 money managers found that 61% believe the stock market's gains this year can be attributed to a "bear market rally," and 41% expect a recession by mid-2024.

This leads me to another one of my favorite Wall Street expressions: "Bull markets climb a wall of worry."

Let people be fearful. Let them worry about what's next. At times like this, focus on your investment strategy that reflects your goals, time horizon, and risk tolerance. We anticipated there would be some bumps along the way.

^{1. CNBC.com, September 27, 2023. “Investors see 2023 gain as a bear market bounce and expect a recession next year, CNBC survey shows.”}