From an economic standpoint, we haven’t lost anything. The economy is growing, employment remains strong, and corporate earnings are on the rise. The fundamentals, which drive markets, are also strong. What we have lost is, possibly, a modicum of future expectations—not something we have now, but something we hoped for in the future. It’s not great, but it’s not a disaster either.

What makes this drop more worrying is that markets have been remarkably calm recently. With the news from Washington full of drama, with markets dropping, and with worries high, it is easy to fall into the old mantra I mentioned the other day: “When in danger or in doubt, run in circles, scream and shout.”

Looking at the big picture, based on sound fundamentals and continuing growth, the market should remain solid, despite short-term volatility. Looking at the big picture, today’s volatility—and today’s news—is noise. Looking at the big picture, to get a bigger and sustained drawdown, we need things we don’t have: a recession, spiking interest rates, or spiking oil prices. Looking at the big picture, conditions remain quite positive.

Yes, we might see a bigger drawdown, but it is likely to be both limited and reasonably short-lived. There will be a time to worry, but right now, despite the very real issues being debated, we are still in a good place as investors.

Remain calm and carry on.

Source:  Brad McMillan, Commonwealth Financial Network