The S&P 500 index fell nearly four percent intraday on Monday, January 24, making for one of its most volatile trading sessions since September 2020. Heading into this period of instability, investors had good reason to believe that the markets were heading for a collapse. Rising inflation, concerns about the Omicron variant, the potential for war with Russia, and a Fed poised to aggressively raise interest rates amidst a clouded U.S. and global economic outlook had seemingly overshadowed any positive catalysts for an upward market move.
With so much uncertainty on the rise, and policymakers poised to drain liquidity from the financial markets, a key question for many investors is whether we are on the precipice of a prolonged market selloff. Certainly, some market watchers and prognosticators are making the rounds on financial media and arguing that this week's volatility is setting the stage for lower equity prices ahead.
Anecdotes aside, historical data indeed suggests that a period of market weakness in risk assets is likely on the horizon after this week's moves. That said, however, there's still a case to be made for avoiding panic and remaining committed to a long-term investment strategy amidst solid economic and corporate fundamentals. Indeed, it's during these times of increased market uncertainty that financial independence masters like yourself preserve their wealth by adhering to their disciplined asset accumulation and retirement distribution strategies.
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