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Client Market Alert: Global Selloff

This is a special Market Alert about today’s global market selloff. We thought it would be a good idea for us to give you our analysis and how we are looking at what’s going on.

There’s an additional item that was not mentioned in Friday’s Market Alert video, which is in regard to a large real estate company in China that is looking to be perhaps, China’s “Lehman” moment—meaning a big financial real estate institution going under. Our view is that China is not going to let that happen and cause a major dislocation of their economy, similar to what happened in the United States in 2008.

We believe that issue will be addressed by the Chinese government, but be that as it may, as I record this, the Dow and the S&P are down significantly. There are two kinds of movements on the downside when it comes to the stock market. One is called a correction, and the other is called a Bear Market.

A correction is a loss down of more than 10 percent, but less than 20. Anything that is 20 percent or over is considered a Bear Market. If we look back over the last 41 years, there have been 28 corrections, meaning a drop in the market of more than 10 percent, but not where it became full-fledged Bear Market. If you do the math on that, it means we have one about every year and a half.

Guess how long it’s been since the last one! It’s almost exactly a year and a half. Now, the last one wasn’t a correction. It was a Bear Market. It was in March of last year when we saw the big drop due to the COVID-19 pandemic.

So, do we view this as anything to panic about and get overly concerned about at this point? We don’t. We just wanted to get this message out to you, so you don’t worry about it. We are watching it, and should we need to act—we will. You can rest assured of that.

At this time, this appears to be a normal correction that happens about every year and a half. Sometimes we see two in one year, and it causes a lot of consternation. It doesn’t feel good. It causes you to be a little bit disconcerted, but at this point, as I said, it is not something that we’re going to panic or do anything about. It’s just one of those times when we have be patient and let it play itself out.

I hope this video finds you in good health and good spirits and we will talk soon.