Market dips as bond yields rise, but smart investors take a long-term approach

Oct 11 18:10 2018 Print This Article

The stock market has taken a dip lately and we’re seeing more turbulence than usual. The Dow Jones dropped about 830 points yesterday.

We wanted to keep you informed about why this is happening. But we also wanted to give you a timely reminder: the market will always have its ups and downs. But our diversified, long-term investment approach helps reduce the impact of times like these and recover faster.

Why is the stock market down? Two words: bond yields

As we reported in our recent market update, the US raised interest rates recently — standard practice in a healthy, growing economy. But with bond yields rising, making it more expensive for people to borrow to make purchases, the profit margins of US companies may get hurt (eg. if it’s more expensive to buy a car because of higher interest rates, a buyer may hold off on that purchase).

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