The following commentary has been posted with the consent of J.P. Morgan Asset Management.
When markets become volatile, it can be easy to lose perspective. Since the November 6th U.S. election, the S&P 500 has fallen nearly 5% as concerns have shifted from who will be the next U.S. President to how the fiscal cliff will be resolved. We continue to believe that Congress will come up with a solution – the biggest question is when. Thus, as uncertainty continues to plague markets, investors should remember that markets rarely move higher in a straight line. Since February 2009, the S&P 500 has fallen by more than 5% in 6 different months, but has risen more than 5% in 10 different months, and is up over 100% since the March 2009 low. Given that this market volatility will likely continue until the fiscal cliff is resolved, it will be important for investors to stay balanced and not panic in the face of a choppy market.