Once again the Chinese stock market has sparked a global market selloff. China's equity market dropped sharply setting into motion a circuit breaker that halted trading. European markets in turn sold off and U.S. markets experienced the worst market start of the year since 2001. China's 10th consecutive monthly decline in manufacturing started the rout. But the U.S.'s second month of manufacturing declines and the Saudi Arabia/Iran tensions sealed the deal. Although this is not a welcome start to 2016, investors should keep in mind a few things:
- The Fed is moving along the road to normalization by ending QE and raising rates.This road will be bumpy.
- Normal markets are volatile and market corrections typically happen two or three times a year. Investors should be prepared for this.
- Markets are ultimately driven by fundamentals, namely corporate earnings. Investors should follow earnings as the best unbiased view of the market's direction.
- While times like these put investor fortitude to the test, trying to time markets is pure folly (see our many discussions about the "Folly of Gaming Diversification"). Instead of losing patience and selling at what may be near the bottom of a downturn,investors are advised to stick with long-term investment plans created during less-fearfultimes.
This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) changes in laws and regulations and (4) changes in the policies of governments and/or regulatory authorities. The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding holdings is not a recommendation to buy or sell any security. Fund holdings are fluid and are subject to daily change based on market conditions and other factors.