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This Week’s Market Sell-Off May Not Be Such a Bad Thing – The New York Times 08-21-15

Salient to Investors:

The market drop this week looks more like a trivial downward bounce within a consistent range and a much-needed breather than a catastrophe in the making.

Markets were priced for perfection in a world economy far from perfect.  $100 invested in stocks still buys only $5.59 in earnings, versus $2.08 for Treasury bonds.

From mid-2009 to mid-2014, stock prices rose much faster than earnings, GDP, all other fundamentals.

The global glut of investment capital has created a mismatch between the global economy and financial markets.

Josh Brown of Ritholtz Wealth Management said that 2015 is the first year since the recovery began where the real economy is outperforming the financial economy.

The emerging markets crisis of 1997 and 1998 were followed by a blockbuster year, 1999, for US economic growth and corporate earnings.

Investors who panic at the thought of losing 6% in a week should not be invested in the stock market.

Read the full article at http://www.nytimes.com/2015/08/22/upshot/this-weeks-market-sell-off-may-not-be-such-a-bad-thing.html

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