Capital Ideas

Investment insights from Capital Group

Market Volatility
Setbacks from shocks are often short-lived


Economic and political shocks occasionally grab headlines and send U.S. markets down sharply. In each of the events above, staying invested through the full decline and following year left investors with more capital than before the shock. Brexit is the most recent example, as the S&P 500 bottomed just four days after the decision and hit all-time highs shortly thereafter. 

In recent weeks, higher-than-expected wage growth and consumer prices sparked concerns over the trajectory of inflation and interest rates. However, as investors have had time to digest the information, markets have already erased some of the declines. Of course there are no guarantees, but volatility may remain elevated in this environment, so maintaining a long-term perspective and riding out uncertainty could be the best course of action.

Past results are not predictive of results in future periods.


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