What's Next For A Turbulent Market

Investors wonder if it’s sink or swim for stocks. Our take: time to bottom-fish.

- Anne Kates Smith

Investors tossed about by the stock market’s rough seas are no doubt wondering what just hit them. A bear market? A bull-market correction? We won’t know for sure until sometime in the future. But when it comes to your investing strategy, the answer matters less than you think.

Stock prices peaked last September and have been in a volatility vortex ever since. From the September peak to the trough on December 24, Standard & Poor’s 500-stock index fell 19.8%—escaping by a whisker the generally accepted definition of a bear market, which is a loss of 20% or more. Other market benchmarks were clearly mauled by the bear, including the small-company Russell 2000, which fell 27%, and the Dow Jones transportation average, down 25%. Losses were greatest in the energy sector, down 31%, and communication services (which includes Alphabet, Facebook and Netflix), down 29%.