Total Returns %

1 Week

YTD

Dow Jones Industrial Average

-1.34%

+9.17%

NASDAQ Composite

-1.60%

+6.58%

S&P 500 Index

-1.72%

+6.56%

Russell 2000

-3.69%

+6.34%

U.S. Aggregate Bond Index

+0.19%

+0.86%

MSCI All Country World

-2.84%

+5.21%

Source: Yahoo! Finance.  Data through 5-6-11

Global markets were rocked last week with large sell-offs in oil and silver, which also spilled over into many other commodities, equities, and currencies.  The S&P 500 had a four-day losing streak to start the month for the first time since October 2008.  So is this just a healthy correction, or is this the start of something bigger?  My initial reaction is that this is just a correction, though it’s too early to tell for sure.  A big increase in jobless claims led to oil dropping by more than 9%, which marked the first time oil fell below the $100 per barrel mark since Mid-March.  However, an unexpected increase in jobs helped the markets turn positive on Friday, silencing those who were urging investors to run for the hills.

This past week is a great example of how important it is to have a disciplined investment approach.  For example, each day last week that silver dropped (it fell over 25% for the week), I’m sure there were plenty of people wanting out.  However, when you look at the long-term picture, I still see silver reaching close to $50 this year since the fundamentals (i.e., US deficit, inflation, etc.) that have been driving the price up have yet to change.  In addition, silver is still approx. 14% above its 200-day EMA

Currently, all the holdings I have in my clients’ portfolios are still above their 200-day EMAs.  If the markets continue to drop, and this isn’t just a healthy correction, I will implement my investment strategy of selling when investments fall below their 200-day EMA.  This time-tested, disciplined approach helps take the emotion (and fear) out of investment decisions.

Do you have an investment strategy that will eliminate emotion from your decision of when to buy or sell?  Call me to schedule a free review of your current investment portfolio – 913.693.7918.

John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals.  For more information, visit https://www.chladekwealth.com.

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