The markets experienced one of the most volatile weeks in recent memory. In fact, the Dow posted its biggest weekly decline in over two years. What’s more, Friday evening Standard and Poors downgraded the U.S. credit rating from AAA to AA. In my first blog of the month (blog) I eluded to the fact that August is typically a softer month for stocks, however, I wasn’t expecting this. For the week the Dow (chart) lost 698.59 points or 5.8%, the tech heavy Nasdaq (chart) lost 223.97 points or 8.1%, the S&P 500 (chart) -92.90 points or 7.2% and the Russell 2000 (chart) gave up the most ground on a percentage basis losing a whopping 10.3% on the week. Equities are most definitely in a correction mode.

Next week promises to be just as volatile as this past week, especially with the Standard & Poors downgrade of the U.S. credit rating. I think it’s important to reflect on history as it pertains to the markets. This period of time reminds me a bit of the circumstances and subsequent fear that took hold of the markets in the 2008/2009 market crash. Although the circumstances are quite different today compared to the 08 the debacle, the rampant fear and panic selling feels similar. Let us remember that after the panic selling of 08/09 was over, the S&P 500 doubled in value. I am not suggesting that we will see a repeat performance of the downside or upside to the markets, what I am suggesting is that fear and panic has never benefited any investor. Let us also not forget there are a lot of healthy corporate balance sheets out there and most likely even the most pristine companies will get dragged down by this current market environment. In times like these, cooler heads most always prevail. Good luck to all.

Have a great weekend 🙂

~George