(New York)

Advisors all over the country got a lot of worried phone calls yesterday. Clients are understandably anxious about the mammoth losses over the last week, all punctuated by an almost 5% fall in the Dow yesterday. One advisor from LA says that “We’re reminding them that we knew this was going to happen and that we’ve been planning for it”. Other advisors are reminding their clients that the economy looks strong and that we are not headed into a recession. One Wells Fargo advisor makes a note that looks negative for stocks, saying “A 10-year Treasury yield above 3% would be reasonable competition for equities, and I would be able to replace fixed income maturities with higher yields for the first time in a decade”.

FINSUM: We think this a healthy correction, but that the market will likely continue to move higher. There is nothing fundamentally wrong with the economy, and once the market realizes that higher rates won’t kill stocks, things will get back to normal. However, this maelstrom is a very healthy recognition of risk.