This week we watched the market demonstrate why this game is not for the faint of heart. During the worst week for the stock market in nearly 2 years, The Dow Jones dropped nearly 4%; my personal portfolio dropped more than 7%, a little over $3,600.
What happened this week? President Trump gave a State of the Union address and touted the growth in the stock market, low unemployment and all around strong economic growth under his administration. The jobs report was slightly better than expected, 200,000 jobs added instead of the predicted 180,000. There was some good news for the middle class, wages are actually rising for the first time in a long time. Somehow despite all that good news, the stock market dropped like a rock.
There is much speculation on why this happened. The leading theory is that because the economy is doing well, the federal reserve will likely raise interest rates making borrowing more expensive. If this is the case, we know from history the stock market is more than capable of growing while interest rates are higher than they are now. So fear not, this week was likely a correction. It could be the start of a recession but the truth is, no one is capable of predicting the market all the time. Some get it right sometimes but no one gets it right all the time.
We know the market always trends upward in the long run. This means that 3 years from now the market will most likely be higher than it is now. So play the long game, invest when the market goes down because everything is on sale and invest when the market goes up, because this is the best time to make large gains.
This week I made the following contributions:
$105 to my IRA
$50 to my E*Trade Brokerage account
$400 to my new Robinhood Brokerage account