This was the single, largest one-day market retraction in the history of Dow Jones.
Was it caused by an inevitable market correction following a nearly year long, seemingly unabated climb in indexes and portfolio returns? New tax laws passed late last year that cut the corporate tax by >40%? Or, was it a cyber-induced panic caused by the onslaught of algorithmic trading at the end-of-day?
It’s hard to say for certain what caused the market to fall as dramatically as it did when it did. However, any major shift in a fixed-income bonds or debt instruments should always be closely followed as they can have a ‘domino effect’ on interest rate yields. Debt issuance activities will affect equity funds, stocks as well as composite driven funds and intangibles such as options, futures and derivatives.
An entire month of stock market gains was wiped out in a single day. You’ve heard it before, but now is great time to remember the importance of reviewing your investment products, strategies and allocations so you can prepare days like this.
My mantra: fixed-income is your friend.