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GCG’s Third Quarter Market Analysis

Written and prepared by: Andrew Gluck, CFA Managing Director of GCG Wealth Management

Uncomfortably Normal

Third quarter returns for stocks, both domestic and global, have been shaken up due to China’s currency devaluation and slowing economic growth. Equity returns for the year, through September 30, were convincingly negative. However, bonds displayed relative strength, eeking out a small gain. All major U.S. stock indices experienced a correction this quarter (defined as being down 10% from their most recent highs) with the Dow Jones Industrial Average experiencing its largest ever one day point decline.(1) We don’t want to discount the potential severity of the current environment, but at the same time we think the higher likelihood is that we are just experiencing “normal” market fluctuations. Legendary investor Warren Buffett has been quoted as saying:

“Getting shaken out of the market due to ‘normal volatility’…
is like being scared at the 12th Halloween movie.”

We are not so flippant about this, and understand the discomfort of sitting through corrections. But Mr. Buffett does raise a valid point, which is that we are not currently in the midst of anything we haven’t seen before… and many times, at that.




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