Hello – I’m Ryan McGuire, Senior Consultant with Oak Wealth Advisors, and here is our August 2023 market review.

While July’s robust market growth boosted diversified portfolios by around 3% on average, August’s market declines essentially eroded those gains. Global stock markets were down anywhere from 1.6% for large cap US stocks, to 6.1% for emerging markets stocks.

However, it’s vital to remember that the year-to-date gains in global stock markets continue to show remarkable resilience, resulting in returns through 8 months for diversified portfolios similar to our long-term expectations for average 12 month returns.

Turning our attention to market drivers, both inflation and interest rates continue to be hot topics and are likely to remain so. A particularly important variable to watch is the influence of escalating oil prices on overall inflation. If inflation proves to be peskier than expected, we could face a longer wait for the Federal Reserve to initiate rate cuts.

Regardless of how the inflation waiting game plays out, it is imperative to keep your eye on the long run. Emotional decision-making, particularly in times of market volatility, often leads to suboptimal investment outcomes. The ideal strategy is to maintain a disciplined approach, as illustrated by the dotted midline on our chart, and to avoid making decisions based on the emotional roller coaster of the curvy line.

Consider this: a chart depicting the performance of a $1,000 investment in the S&P 500 from 1990-2022 shows an impressive annual return of 9.75%. Contrast that with the risk-free yield of one-month Treasury Bills at 2.53% per year. The stakes of straying from a disciplined approach are high: missing out on just the 5 best trading days during that 23-year period would have slashed your annual returns by 1.5%. If you missed the top 15 days, your long-term returns would decline to 6.28%. Forfeit the 25 best days, and you’d cut your average returns to just 4.72%.

The takeaway? Short-term fluctuations are just that—short-term. A steady, long-term investment approach not only stands the test of time but has the potential to yield exponentially greater returns. So, as we navigate through periods of market volatility and various global market stressors, let’s not lose sight of the bigger picture: a disciplined, long-term strategy is your best ally for financial growth.

Thanks for tuning in, and as always, feel free to reach out with any questions. Take care.