Market Perspective Turbulence on Wall Street is a periodic occurrence that regularly punctuates the ongoing upward path of progress. More often than not, there is a retreat of 10% to 15% during the year and less frequently, price pullbacks are even more pronounced. Recent examples of the latter took place during the closing quarter of 2018 as well as the opening months of 2020. In both cases (as always happens), the rebounds that followed carried stock prices to even higher levels. The current slippage will follow the same pattern. For an extended period, we’ve pointed out the frothiness of market valuations, but stretched valuations alone do not ignite downturns in prices. Indeed, excesses tend to last far longer than might appear justified. What triggers pullbacks are events that threaten to impede economic progress. Rising interest rates, international tensions, significant negative business developments, and yes, the current pandemic, are key examples of what may
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.